Inside Google's shadow workforce of contract laborers

Every day, tens of thousands of people stream into Google offices wearing red name badges. They eat in Google's cafeterias, ride its commuter shuttles and work alongside its celebrated geeks. But they can't access all of the company's celebrated perks. They aren't entitled to stock and can't enter certain offices. Many don't have health insurance.

Google's Alphabet Inc. employs hordes of these red-badged contract workers in addition to its full-fledged staff, who wear white badges. They serve meals and clean offices. They write code, handle sales calls, recruit staff, screen YouTube videos, test self-driving cars and even manage entire teams.

Earlier this year, those contractors outnumbered direct employees for the first time in the company's 20-year history, according to a person who viewed the numbers on an internal company database. It's unclear whether that is still the case. Alphabet reported 89,058 direct employees at the end of the second quarter. The company declined to comment on the number of contract workers.

Other companies, such as Apple and Facebook, also rely on a steady influx of contractors. Investors watch employee head count closely at these tech powerhouses, expecting that they keep posting impressive gains by maintaining skinnier workforces than older corporate titans. Hiring contractors keeps the official head count low, and frees up millions of dollars to retain superstars in fields like artificial intelligence.

The result is an invisible workforce, off the company payrolls, that does the grunt work for the Silicon Valley giants with few of the rewards. Google has a name for them: TVCs, or "temps, vendors and contractors."

They are employed by several outside agencies, including Adecco Group, Cognizant Technology Solutions and Randstad. Google declined to say how many agencies the company uses. Many current and former contract workers and full employees declined to speak on the record because they didn't want to jeopardize their employment.

"They feel isolated, precarious and like second-class citizens," Yana Calou, an organizer with advocacy group Coworker.org who speaks with Google employees and contractors, said. "It's a microcosm of what's happening in the economy as a whole."

Some contract workers viewed Google as a generous workplace that boosted their careers. Still, despite their ubiquity there, many felt peripheral. Several noted the subtle slights apparent from their arrival. The first thing people eye at work, one former TVC recalled, is the color of someone's badge. "People look down on you even though you're doing the same work," said one contractor who spent two years at Google managing multiple other employees. Said another ex-TVC: "You're there, but you're not there."

The line between TVCs and full-timers is clear. One 2016 TVC employment contract from Zenith Talent Corp., a recruiting agency, states that TVCs "will not be entitled to any compensation, options, stock, insurance or other rights or benefits accorded to employees of Google." The terms hold even if a court later determines the worker was legally a Google employee. Zenith did not respond to requests for comment.

Another clause hints at the type of work Google contracts out. The TVC agreement includes a release for any "adult content" contractors may encounter at work. In signing, contractors relieve Google of any liability related to the material. In 2017, the company pledged to hire as many as 10,000 content moderators in 2018 after mounting criticism of offensive videos on YouTube. Some of these moderators are full-fledged staff, but Google declined to say how many or provide an update.

Several former contractors noted that Google does offer benefits for contractors that other large companies don't. TVCs can eat at cafeterias for free and use some company facilities like its bowling alleys and gyms. For many, a TVC position offers a foothold for a permanent role at Google or elsewhere.

The largest burden for many contractors is health care. All the contractors Bloomberg News spoke with said the contracting agencies, which are responsible for health insurance, offered either inadequate plans or none. One former TVC, who worked for Adecco, said he paid roughly $600 out of pocket a month for coverage to treat diabetes.

Under Chief Financial Officer Ruth Porat, Alphabet has tightened its freewheeling spending. Yet the company hasn't stopped its appetite for expensive engineers, who can easily fetch $1 million a year or more. That decision necessitates more contractors.

In recent years, Google has brought some contract positions in-house. Following criticism, in 2014 it announced that some security guards would become direct staff. Most contractors do not work longer than two-year stints, according to multiple contract workers, but some serve multiple terms on the hopes of becoming direct employees. Google did not provide data on how many achieve that.