Back in October, around the time when Yahoo redundancy rumours were high, it was also rumoured that Google would also reduce 10,000 contractors to reduce overall costs.

In November, SearchEngineLand wrote that Jane Penner, Google spokeswoman had confirmed “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."

Around the same time Google shut down projects on Lively virtual world and SearchMash.

Earlier this month Associated Press reported that Google confirmed the cut of a “substantial” number of contract and temporary employees. Although the exact number is not yet known, it is said that Google has 24,400 employees; of which 4,300 are contract, temporary or interns.

A Google spokesperson has said that the 4,300 employees are a “subset” of the 10,000 mentioned in October.

Despite this announcement, Google have said that they will continue to fund the research and development and continue to buy out other companies in a consistent pace as they have over last few years.

Later this month Google reconfirmed that they would continue hiring but at a reduced rate.
”Google is still hiring but at a reduced rate. Given the state of the economy, we recognized that we needed fewer people focused on hiring.

Our first step to address this was to wind down almost all our contracts with external contractors and vendors providing recruiting services for Google.
However, after much consideration, we have with great regret decided that we need to go further and reduce the overall size of our recruiting organization by approximately 100 positions.

We know this change will be very difficult for the people concerned, and we hope that many of them will be able to find new roles at Google. They helped build this company, new hire by new hire, and we are enormously grateful for everything they have done.”

Furthermore the Google blog also announced the decision to move all 70 engineering employees from Austin, Texas; Trondheim, Norway; and Lulea, Sweden into other offices to build more effective teams, reduce communication overheads and to increase options for future projects.

Google said “Our strong desire is to keep as many of these 70 engineering employees at Google as possible. However, we do recognize the upheaval and heartache that these changes may have on Google families, and that we may not be able to keep 100% of these exceptional employees.

Our long-term goal is not to trim the number of people we have working on engineering projects or reduce our global presence, but create a smaller number of more effective engineering sites, which will ensure that innovation and speed remain at our core.”

News Source: Official Google Blog, Search Engine Land, The Associated Press