Google cutting costs – what, me worry?


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By Sterling “Chip” Camden
Contributing Writer, [GAS]

Is it perhaps the worst sign yet of how badly the economy is in trouble? Is it anindicator that Google’s business model is finally reaching the end of its long rope? Or both?

Everybody’s been trying to cut costs lately, but the last company you expected to hear it from was Google — right? Well, maybe not. For years now, the Gorilla of search has been living with its own 800-pound gorilla: they’ve realized that Google cannot continue its amazing growth on ad revenues alone, but they haven’t managed to invent another revenue stream that’s amounted to more than a trickle by comparison. Although their overall revenue continues to grow, that growth was much slower over the past year. Between that andpremonitions ofworse to come in theglobal economy, Google has decided to do a little belt-tightening.

We don’t use the word “layoffs” — no, rather than firing permanent employees, Google is cutting its contract labor by not renewing contracts. But Google employs quite a few contractors — around 10,000 compared to about20,000 permanent employees around the world. So Google could reduce its workforce by one third without eliminating a single permanent position.

Someof those contract positions service the many perks that have made employment at Google the envy and desire of technocrats everywhere. Some of those perks will be disappearing as well.

And remember their policy of20% time, in which engineers were encouraged to devote 20% of their time to whatever they wanted to work on? That won’t be eliminated (yet), but special projects will have a much harder time getting funding and personnel to see them through.

Services that have already been deployed but didn’t make their expected big splash will be shut down. Lively, SearchMash, and Page Creator (I never saw the sense in that one anyway) are already on the chopping block — with more to follow. Gee, I hope they don’t axe GMail.

Google’s amazing success over the last ten years has drawn innumerable imitators. PHB’s everywhere tried to be clueful and encourage innovation by offering employees free food, flexible hours and improved working conditions (can you say, “dual monitors”?). Some even implemented their ownversionsof the famous 20% time (though more often it was like 5% — and after 6PM). With Google cutting back in these areas, expect a lot of “I knew it wouldn’t work” (even though they wereevangelists at the time)and “if Google’s tightening up, we’d betterfollow in trumps.” Now is not a good time to ask youremployer for a better grade of coffee — they just might take your cup away to collect spare change.





14 Responses to Google cutting costs – what, me worry?

  1. Wow this is a very bad news, if Google fails what will do all those peoples that depends on Adsense revenue? I guess they must be shaking right now after this news.

    • I don’t think that Google will go under any time soon, and Adsense is one of their best revenue generators. I would be really surprised if that folded.

      But seeing Google batten down the hatches should tell us that the approaching storm may reach category 5.

  2. Wow this is a very bad news, if Google fails what will do all those peoples that depends on Adsense revenue? I guess they must be shaking right now after this news.

    • I don't think that Google will go under any time soon, and Adsense is one of their best revenue generators. I would be really surprised if that folded.

      But seeing Google batten down the hatches should tell us that the approaching storm may reach category 5.

  3. “Now is not a good time to ask your employer for a better grade of coffee they just might take your cup away to collect spare change.”

    My office has already done that under the guise of “Going Green” and that was after they removed the real coffee pots and going to coffee machines that have a bag of concentrated coffee that auto dispenses some sort of blackish goo.

    • Yipes! You can make me work 20 hour days, you can render my brilliant ideas futile by committee, but don’t touch my coffee!

  4. "Now is not a good time to ask your employer for a better grade of coffee — they just might take your cup away to collect spare change."

    My office has already done that under the guise of "Going Green" and that was after they removed the real coffee pots and going to coffee machines that have a bag of concentrated coffee that auto dispenses some sort of blackish goo.