Google's Ranks Grow Faster Than Its Revenues

A year ago, Google announced to much fanfare it would buy DoubleClick for $3.1 billion. A month ago, Google said it would lay off workers in the target company who overlapped with its own staff. True to its word, Google reported Thursday it had laid off 10 percent of DoubleClick’s headcount in the March quarter, and another 15 percent would come as they wore out their relevance to their new Google masters. But that’s not the real news.

Google CFO George Reyes also said that overall headcount at Google had grown by 800 in the first quarter excluding DoubleClick, thanks to new hiring in engineering and sales/marketing jobs. Last summer, analysts and investors were concerned that Google was hiring too fast - faster, at least, than its revenue was growing. No one has said it yet, but that is exactly what is happening this year.

Let’s do the math. According to CNN, Google added 1500 jobs once the DoubleClick deal cleared, so a 10 percent cut means a loss of 150 jobs. At the end of 2007, Google employed 16,805 employees, which means the company brought in $309,000 per employee. Add 650 net hires in the first quarter, as Reyes said, and you get 17,455 employees, or revenue of $276,000 per employee.

So Google is touting more layoffs with the end result of 11 percent less revenue per employee. And that’s just one quarter.

The announcement came from Reyes, who eight months after he announced he’s leaving Google is still toiling away as Google sifts through candidates. According to CEO Eric Schmidt, the company still hasn’t made any offers. Reyes made the announcement on Thursday’s earnings conference call.

It’s clear that Google is hiring with plans to generate more revenue and profit in the long term. And it beat Wall Street’s numbers this time. But if business should slow down at Google even as its hiring holds its pace, Google could start to face renewed pressure to lay off more staff, and not only DoubleClick workers.