Microsoft Unlikely To Massively Slash Jobs After All

Both sources that originally published that Microsoft was going to lay off 17 percent of its staff have apparently backtracked on their claims, although Microsoft is still widely anticipated to kick off company wide cost-cutting processes.

News website and the Mini-Microsoft blog have both already published articles since their initial reports that have led commentators to say that Microsoft will chop agency staff rather than the 95,000 or so full time employees.

Mini Microsoft, whose ultimate goal is to convince Microsoft to convert into a "lean, mean, efficient customer pleasing profit making machine", says that it is likely that Microsoft will not do straight "layoff" but rather do "re-org and cut groups/projects".

Furthermore, sources close to the plan have also revealed to MSNBC that the cuts, which may be announced as early as the 15th of January, will come mainly through "attrition and the non-renewal of contract employees" rather than a potentially disastrous PR-unfriendly "layoff", a technique used by Google and Cisco.

The Seattle Times also understands that Microsoft will cut travel expenses, freeze hiring and possibly slash bonuses schemes; it will be interesting to see what impact the moves will have on the employees' morale. Any cost cutting exercise is likely to boost Microsoft shares price.

Microsoft, like many other companies, is expected to adopt a policy of zero-growth (which might include scaling back on research and development) as far as some groups are concerned and that some company internal reorganisations might include asking some employees to find a new job within the company within a set number of weeks or otherwise face the sack.

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Our Comments

One has to wonder whether canning contract employees is worth it. However, if they are being paid anywhere like Agency Staff at NHS hospitals (who are paid up to nearly 10 times their NHS employed counterparts), then yes. But that is unlikely. As one commentator reckons, a 10 percent employee cull does not yield a 10 percent salary cost cut. Indeed. reducing salary costs by approximately 10 percent will require cuts in the bottom 70 percent simply because those at the top of the ladder earn much more.

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