Layoffs in Google – Bad but Probably Reasonable

Rumor of the day today is that even Google is not as immune to the recession as we used to believe with 500 people already laid off and a total of 10 thousand to be affected as well. And while the blogosphere is actively engaged in a conversation about the huge number of layoffs, everyone agrees that the rumor is most probably wrong and the number of people will not reach anything near 10,000.

The figure of 10,000 itself arrives from the fact that Google has 10 thousand people working for the company as temporary workers, or contractors without all the full-time employment benefits involved. This arrangement both makes the expenses lower as these workers are not paid benefits or offered stock options and also makes the company look healthy to shareholders as the productivity per employee is higher than it could be if everyone was actually counted.

Laying off personnel classified as temporary workers (or in this case cancelling or not renewing their contracts) does not require public reporting - which explains why we did not know of the 500 people already out of their jobs if this actually happened. Still it is rather surprising that no one of the 500 people sent a tip to a technology blogger who would have gladly covered the story given the existing trends of the layoffs coverage. But some commentators suggest that the people were requested to sign non-disclosure agreements which could explain why we have heard nothing about it.

Anyway I agree with VentureBeat’s Anthony Ha when he mentions that the number of people that will be let go will be significantly lower and probably removing an extra zero from the 10,000 could be a good idea. So I think the realistic part of the story is that some contractors will definitely have to be ready not to have their contracts renewed while we probably should not expect actual cancellation of contracts.

I think everyone will have to agree that having 10,000 contractors definitely sounds like way too many and Google may simply be restructuring expenses to get ready to survive the financial crisis. What’s more, it is told that the plan to reduce the number of contractors from 10 thousand to something more reasonable has been here for a while now already so there’s nothing sensational here - simply a business decision intended to run the business in a more productive way, even if caused by the financial crisis to a certain extent. So maybe we’ll have to agree that some of the operations in Google simply were not healthy enough with the famous 20 per cent time, free food and large-scale parties and now Google is simply cutting the costs where they are not actually needed.

Photo: Piutus/Flickr