According to an article recently appeared on CNET, Google would be on the verge of cutting as much as 10,000 contractor jobs as part of a plan to reduce spending and better face an economic downturn that has come to heavily affect the IT industry.

As noted in the article, the news isn't exactly fresh, since the company had already announced last month that such cuts would be performed. A piece published on IT news website WebGuild provocatively states that the cuts that were announced in October may affect as many as ten thousand contractors, although the exact number of people at risk is not clear at the moment as no official figures have emerged just yet.

Google co-founder Sergey Brin stated in an interview released last month that the number of contractors employed at the company is very high, particularly when compared to the 20,000 regular employees. Brin also said that Google had been working for over six months on a plan to significantly reduce their numbers through vendor management, converting some contractors to regular employees as well as with "other approaches".

The company had already announced another cost-cutting measure in August, when Google spokesmen said that there would be cuts on the free meals and several other perks that are traditionally being granted to Google employees, particularly in its Silicon Valley headquarters (better known to the media as "the Googleplex"): the free daily meals were cut from four to just two on that occasion.

Now, rumors are that a big portion of the ten thousand contractors might be affected. CNET reports that Google spokeswoman Jane Penner didn't get too specific on the number of the personnel that could be affected, although she confirmed that the company had long planned to take this move before the economic crisis even started:

"We have 10,000, and we have had a plan in place for awhile to significantly reduce that number [...] This is something we've been thinking about for awhile — six or seven months. It predates the most acute phase of the (present economic) crisis".

According to various sources, since August hundreds of employees have already been laid off and there are reports that ab

out five hundreds of them were recruiters for Google, which is clearly a signal that, at the very least, the company is going to slow down new hiring considerably in the next future.

The company stock didn't seem to be affected by the news so far: many analysts, including Forbes, agree that this is the case mostly because in the official documents only regular employees layoffs tend to affect the market movements. As others noted, Google's decision to cut a significant percentage of their staff for a company that is currently generating a yearly revenue in excess of $17 bln may be a choice even too much on the cautious side.

According to Global Equities Research analyst Trip Chowdhry, Google would have to let go as much as 3,000 contract workers, or about ten percent of the current staff, either by laying off or simply by not renovating their contracts in order to carefully control its costs, although even this many jobs cuts may not be enough according to his own estimations: "Until housing prices drop to 2001 levels and oil hits $25 a barrel again — or incomes go up dramatically — there won't be enough discretionary income to keep Google's advertising-driven business growing [...] Because Google is the leader for the consumer Internet, their success is their curse", he told Forbes in a recent interview.

The Times Online reports that, so far, the job cuts in Silicon Valley alone have affected 140,000 people employed at tech industry leaders such as Yahoo!, Hewlett Packard and Sun Microsystems. Although Google recently reported robust third quarter earnings, cuts to marketing budgets are beginning to weigh on online advertising, and in the last month the Mountain View-based company manifested several times the intention to cut on frivolous expenses such as, Times Online reports, "the millions of dollars it has splashed out in recent years on lavish staff parties".

Meanwhile, the company stock is 40 percent down from its last year's high and, with the current online advertising market crisis on the way, it is unlikely that the price will raise to new record levels anytime soon. Should the cost cutting policy continue for the search engine giant, it will be interesting to see how far such cuts will go for a company that has put in lavish employees benefits — such as the "20 percent free time" — one of its distinctive trademarks.