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January 1, 2009

More Microsoft January 2009 layoff rumors

Posted by David Hunter at 12:49 PM ET.

The New Year’s Day Microsoft buzz is a rumor of a huge 17% layoff at Microsoft on January 15:

The rumor that Microsoft was set to lay off people on January 15th, 2009 is no longer a rumor but a fact. Staff at Microsoft have been informed that the company is readying major layoffs to its worldwide operations and it’s not a small cut, either.

Currently Microsoft employs about 90,000 people across the world and from what we’re hearing, some 15,000 of those are expected to be giving marching orders come January 15th. That’s almost 17 percent of Microsoft’s total work force, not exactly a small number.

Frankly, the number is so large as to be unbelievable given the fact that to all appearances, Microsoft’s business does not seem to be all that bad despite the economic downturn. Could there be some really gloomy news on the way?

At the Mini-Microsoft water cooler (which was the original source of last week’s rumors) there is a new post detailing some comments to the effect that there will not be any layoffs at all. However, the crowd isn’t having any of it and the general theme is that while there may not be across-the-board layoffs, many projects may feel the axe. A sample:

From 12/23/2008, a more likely scenario that feels like a layoff but gives corporate cover:

MS will not do straight layoff. It will re-org, and cut groups/projects. Say 2000 FTE are given 4 weeks to land a new job within MS, I bet 1500 will find nothing and will be forced to leave. So no layoff, let’s call it "reorg-off" and MS can even save layoff package.

In-line with that, from 12/21/2008, bringing up an interesting point about H1Bs:

[T]his company simply could not go through a round of layoff (mind you I did not say a RIF, as we’ve all seen those) but the H1-B rules would force all of the cheap labor to be shown the door first, regardless of ranking. And Microsoft lives for ranking. Microsoft wakes up in the morning and get an enormous boner over rankings. So don’t suggest for a second that there is some dismal, far reaching lay off coming down the river.

It’s a layoff masked as rhythm-of-business reorganization plus performance management plus Not To Exceed staffing budgets being strictly enforced.

Such a selective pruning is best, of course, but invariably it gets embroiled in a massive amount of corporate politics which is why companies often opt for across the board cuts.

In Microsoft’s case, how would you trade off projects in the cash cows like Windows, Office or Server & Tools versus Steve Ballmer’s "big bet" cash sinkholes in Entertainment & Devices and Online Services? I know how I would do it (good bye E&D!), but more to the point, how would Steve Ballmer trade them off while saving face? Non-optimally, I’m sure.



Filed under Employee Retention, Executives, Financial, General Business, Investor Relations, Layoffs, Microsoft, Steve Ballmer

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5 Responses to “More Microsoft January 2009 layoff rumors”

  1. adam hartung Says:

    Layoffs, at best, produce only short-term improvement. At the risk of creating severe damage. Like a crash, starvation diet – the health risks outweigh the short-term gain. Instead, businesses need to change what they do to be more competitive – and that involves applying innovation – rather than focusing on cost cutting. Read more at http://www.ThePhoenixPrinciple.com

  2. Dexter Says:

    There are more layoff news 2009 at Microsoft:
    http://layoffblog.com/2008/12/31/microsoft-asked-to-lay-off-over-9000-employees/

  3. Sources: Microsoft cuts to be through attrition and contractors | Microsoft News Tracker Says:

    [...] latest installment in the Microsoft layoff rumor saga is provided by CNBC’s Jim Goldman who says that anonymous sources tell him that Microsoft [...]

  4. January 15, but no Microsoft layoffs | Microsoft News Tracker Says:

    [...] is January 15, 2009, the rumored date for Microsoft to announce huge layoffs, but that just has not happened. What we do have is a story from the Wall Street Journal that [...]

  5. Berganhoff Jaminsky Says:

    January 21 and no layoffs. MS is closer to numbers than many think…including over in several key areas. Cummulative will make Wall Street numbers.

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