In times of recession, even the most successful of companies feel the pinch. In a testament to this fact, search giant Google is planning to cut scores of jobs in its sales and marketing team after saying it hired too many people into overlapping jobs.
''When companies grow that quickly it's almost impossible to get everything right - and we certainly didn't,'' said Omid Kordestani, Google senior VP for global sales and business development in a blog posting on Thursday. ''In some areas we've created overlapping organizations which not only duplicate effort but also complicate the decision-making process.''
The company also said it over invested in some areas ''in preparation for the growth trends we were experiencing at the time.'' The posting said ''just under 200'' sales and marketing positions would be eliminated globally. It was not clear Friday what the cuts might mean for the Pittsburgh office. Workers will be given a chance to find other jobs within the company, Google said, although not everybody can be accommodated.
Google is the No 1 search engine in the United States, with a roughly 63 per cent market share. In 2008, 97 per cent of Google's $21.8 billion in revenue came from advertising.
Google's strength in text-based search advertising has shielded it from the difficult conditions plaguing the online display ads that companies like Yahoo and AOL depend on. Even so, Google's business has not been completely immune. Total sales grew 18 per cent in the fourth quarter of 2008 versus 51 per cent in the fourth quarter of 2007.
Google is curbing costs as businesses reduce spending on online advertising, its main revenue source (See: After closing down Print Ads, Google exits Audio Ads programme / Google cancels print ad programme). The company announced plans in January to cut about 100 recruiting jobs, followed in February by the closure of its radio-programming business, eliminating as many as 40 jobs. The latest cuts will help Google simplify decision making, after years of expansion created bureaucracy, spokesman Matt Furman said. (See: Google cuts down on staff and operations)
''It was getting hard to get things done quickly and efficiently,'' Furman said. ''At the same time, we were over- invested in some areas. Those investments were based on assumptions about economic growth that made sense at the time, but don't anymore.'' The company continues to hire at a reduced rate, targeting specific job roles, he said.
The latest round of cuts will affect about 1 per cent of the workforce. Google had more than 20,000 employees at the end of last year. The company had already slowed hiring in the fourth quarter - adding about 100 people, compared with about 500 in the third quarter.
Google, based in Mountain View, California, rose $9.22, or 2.7 per cent, to $353.29 yesterday on the NASDAQ Stock Market. The stock has climbed 15 per cent this year.