Google has long been known to spare no expense when it comes to perks for employees. Looks like the slowdown in ad revenue is having an impact on Google, and the company is looking for ways to trim costs. In addition to staff reductions, Google also is cutting back on Googlers' 20% time on pet projects and has reduced the availability of its free cafeterias.The Wall Street Journal posted an extended story today on what Google is doing to curtail costs in light of the current economic climate. The laundry list is very long. It includes:

• Running ads in services it previously provided ad-free.
• Shifting engineers from pet projects to those that are more likely to succeed.
• Cutting back the number of hours its cafeterias are open.
• No more afternoon tea for Google's NYC office.
• Killing off services that aren't succeeding.
• Office closures.
• Merging overlapping services into one unit.
• Slowing down the rate of hiring new staff.
• Reducing current staff levels by up to 10,000 people.
• Delaying the production of new data facilities.

What I think is most significant is the way Google is going to manage its engineers. Google CEO Eric Schmidt told The Journal that it is shifting its engineering and sales resources to areas and projects that show promise, and reducing the number of engineers working on projects with less promise.

This represents a pretty big change in Google's thinking. It has always offered Google employees the opportunity to work on projects and services that they wanted to for 20% of their time. Google didn't say that it was taking away that 20%, but it is going to manage it differently.

SearchMash already has been killed off by Google, and Lively will be shut down at the end of this month. Other services on the brink of elimination include Google Notebook (which I use and happen to like) and Google Audio Indexing. If there are any other services that Google might pull the plug on, they haven't yet been named.

In all, Google is taking the economy seriously and making the appropriate shifts in its business practices to meet these uncertain times.