Google resorting to austerity measures: WSJ

December 3rd, 2008 - 3:19 pm ICT by IANS  

New York, Dec 3 (IANS) Feeling the pinch of the global economic slowdown and the US recession in particular, Google, the internet search engine giant, is resorting to austerity measures, The Wall Street Journal has reported.Prominent among them include cutting new projects, ratcheting back spending, chipping away at perks and reducing employee strength. Such measure from Google, which is known for its generous perks, has come as a surprise to many industry watchers.

The latest Google measures are understandable as its revenue growth has slowed down dramatically over the past one year. Google’s share price Tuesday was $275.11 as compared to $741.79 in November 2007.

“We have to behave as though we don’t know what’s going to happen,” Google Chief Executive Eric Schmidt was quoted as saying by The Wall Street Journal.

The company will curtail the “dark matter,” Schmidt said, projects that “haven’t really caught on” and “aren’t really that exciting.”

Schmidt said the company is “not going to give” an engineer 20 people to work with on certain experimental projects anymore. Popular social networking site Orkut was a product of this experiment by Google. Schmidt, however, promised to get this back when things improve.

Google executives had started preparing for the slow down about a year ago, but things have now accelerated. In recent weeks, Schmidt has held meetings with top executives to determine where to focus investment more narrowly, the Journal said.

Top priorities include display ads, which use graphics and appear on Web pages; advertising on mobile phones; and the company’s online business software.

Schmidt says the company is shifting more engineering and sales resources to those areas, and away from less-promising projects. Teams on projects the company is merely “fiddling with,” he says, will get “naturally smaller as people get plucked off”, the report said.

The Wall Street Journal said the financial crisis has created a new sense of urgency within the company. Top executives say they remain committed to projects they believe hold long-term potential, but are prepared to “starve” lesser ones.

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