Google is slashing the number of contract workers it employs, suggesting that even the most successful of businesses face a torrid time as a global slowdown begins to bite.

A spokesman for the internet search giant said: "We have been thinking for some time, before the acute phase of the economic crisis, about significantly reducing the number contract workers."

Google employs about 10,000 contractors and a further 20,000 full staff members. It did not say how many contractors, who do not qualify for full company benefits, will be affected by the move to cut costs.

Earnings at Google have soared in recent years, but so too have staffing costs and salaries, which had been a drag on the group's share price even before the credit crunch struck.

Sergey Brin, the billionaire co-founder of Google, recently signalled that contractor cuts were likely when he told the San Jose Mercury News that contractor expenses were "really high".

Although Google recently reported robust third quarter earnings, cuts to marketing budgets are beginning to weigh on online advertising, a sector once seen as near impervious to a spending slowdown.

Google, in line with its peers in internet advertising, had earlier indicated that it would clamp down on more frivolous expenditures, such as the millions of dollars it has splashed out in recent years on lavish staff parties.

Silicon Valley has already suffered a slew of job cuts. More than 140,000 jobs have been lost there in the past few months, according to Challenger, Gray and Christmas, the consultants, as the axe has fallen at tech industry stalwarts including Hewlett Packard, Sun Microsystems and Yahoo.

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