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Inside Google's 'Unofficial' Hiring Freeze

By David Faber, CNBC Reporter and Anchor
Tuesday, 4 Nov 2008 | 3:31 PM ET

Google, one of the nation's great growth engines for employment, has essentially stopped hiring for the last month, according to several executives at the company.

A spokesperson at the company says there has been no freeze on hiring, but several executives I have spoken with who have hiring responsiblity said it was made clear to them one month ago they were to make no new hires, including at the secretarial level and they were

Google Headquarters
AP
Google Headquarters

directed to fill all vacancies with internal candidates. In effect, they term it an unofficial hiring freeze.

In the last two years, Google has more than doubled its head count, growing from 9,300 employees to a current full time work force of 20,100 as its earnings and revenues soared.

Google spends lavishly on its employees, who have become accustomed to a slew of privileges from onsite massages to three free gourmet meals a day to a concierge service.

In recent months Google has been cutting back on some perks and in a recent interview following its third quarter earnings CEO Eric Schmidt said the company had slowed its hiring.

Executives at the company tell me the new focus on costs comes from CFO Patrick Pichette, who joined Google in late june.

The key question for investors is whether it is part of an effort to raise margins or respond to a unexpected slowing in on-line advertsing beyond what Google anticpated.

  • Watch David Faber discuss his report on CNBC.

Google dominates on line advertising, but as that market's growth slows so too does Google.

As well, Google is dealing with headwinds from its YouTube and applications businesses, both of which will lose significant sums in the year ahead.

While YouTube is a widely visisted site, given all the video it serves up, it is expensive to run and Google has yet to make signifcant gains in monetizing much of the traffic the site receives.

Advertisers tell me they are reluctant to spend on YouTube because they can not be certain what videos they are going to be delivered with. In a sign of Google's efforts to ramp up ad spending on YouTube, insiders tell me it has incented its workforce that sells ads for the site with a more lucrative compensation structure.

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