Google Inc. (GOOG: sentiment, chart, options) confirmed late yesterday that it will begin to "significantly" reduce the number of contract workers on its payroll. Company spokeswoman Jane Penner said, "We have been thinking for some time, before the acute phase of the economic crisis, about significantly reducing the number contract workers." Last month, co-founder Sergey Brin indicated that his company's contractor-related expenses were "really high," indicating that some cuts may be in the offing.

The Internet-search titan had about 10,000 contractors at the end of the third quarter, but Penner didn't elaborate as to the number of workers that would be eliminated. Currently, Google said it has no plans to lay off permanent employees, of which it has 20,123.

In early trading, GOOG is up nearly 8% at $278. With the shares trading at 3-year lows, option traders are beginning to prefer bearish bets on the tech firm. During the past 10 trading days, the stock has racked up a put/call ratio of 0.96 on the International Securities Exchange (ISE). This reading ranks in the 88th annual percentile, which suggests that GOOG's option activity on the ISE has rarely been more skewed toward puts.