Microsoft is getting lots of attention for a new policy that will prevent its large contract workforce from accessing company buildings and the internal network after 18 months on the job — requiring a six-month break even for “v-dash” vendors who previously were on indefinite assignments.

microsoftlogo1-1024x680It’s a significant change in policy that promises to make many Microsoft teams think twice about using large numbers of contractors — people who work on Microsoft projects through third-party firms. It’s also a major cultural change for the company, which has come to rely heavily on these contract workers.

However, in follow-up communications over the past week, the company is downplaying the impact of the changes. For example, I’ve been hearing from some v-dash workers that they’ve been told there will be a process for making exceptions in some cases, depending on the specific circumstances of their work.

The company is also saying that the end of access to the network and buildings does not necessarily mean that each contractor will need to stop working after 18 months — that some can continue to complete their work without that access.

However, current and former employees still say this won’t be practical in many situations, making the policy change effectively a “shadow layoff” that will result in far fewer contract workers over time.

A Microsoft spokesman tells us via email that the company will be watching the situation closely to assess the impact on its teams.

“The goal of the policy is to protect Microsoft IP, not to cripple the business,” the spokesman says. “Over the coming months, we will work with leaders in the business to understand the specific work being completed, and determine the most appropriate path forward to ensure the work continues to get completed.”

The spokesman adds, “External staff are critical business partners, and while network and building access may be required to effectively complete their work, we often have effective means of working together without granting access, including tools like SharePoint online to collaborate on and share documents.”

Any change in Microsoft’s contractor policies has significant implications for its workforce. Internal numbers obtained by GeekWire show that Microsoft had more than 70,000 contract workers as of last year, compared to about 100,000 direct employees at the time.

It’s clear that Microsoft is seeking to rely less on contract workers in some cases. One example: Kevin Turner, Microsoft’s chief operating officer, said in a memo to the company’s sales and marketing groups last week that the plan is to “reduce our reliance on contingent staff augmentation by over 20 percent year-over-year” in that part of the company, according to Mary Jo Foley of ZDNet.

Previously on GeekWire
Internal memo: Microsoft to cut off all ‘external staff’ after 18 months, imposing mandatory 6-month break
Microsoft’s contractor crackdown: ‘Shadow layoff’ could force big cultural changes inside company

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  • LEB

    Does this mean change occurs before the first change goes into effect? :)

    Maybe the policy makers saw a vision on what Microsoft offices would look like on January 2, 2016 after the flood gates
    open and 15,000 – 25,000 or higher, vendors exit Microsoft. Hmmmmm the silence could be Deafening.

    • Steve Snow

      The quick and simple answer to your initial question is “no”.
      Microsoft will lose valuable continuity, some excellent vendors, and trusted “external” employees. They will protect IP less with “short-timers” and forget the issue of “who you work for”. It is absolutely sophomoric at best.
      After 30+ years, Microsoft is still a relatively immature company. I don’t see that changing.

  • V-

    “The goal of the policy is to protect Microsoft IP, not to cripple the business,”
    So you force your trusted contractors whom have never leaked anything to quit and hire fresh ones of unknown trust? Or do they think that giving us a 6 month break will help us to forget all the secrets we know?

    I honestly cannot think of a way where IP is the real concern here.

    One of two things is going to happen:
    #1. They are going to hire all essential contractors (mostly engineers/developers) as full time employees, and layoff the rest. Thus protecting some IP. Then the 18on 6off rule would only apply to Technicians and lower level employees (whom would be easier to replace).

    #2 They are going to reduce their overall workforce by tens of thousands by forcing Engineering/developer contractors to quit with the new rule. Taking whats left of Nokia, and possibly cutting down on projects to supplement the missing engineers. Also, forcing current employees to take on more responsibility.

    I am hoping for #1. In many ways its the right thing to do. I often do the same work as FTE’s with less pay and less benefits. It will hurt some (through layoffs) but will help the majority of contracting engineers. It would also help Microsoft retain talent and protect IP. However, I think this is the least likely solution. The reason Microsoft hired V- contractors to begin with is to save money. Paying people benefits and retirement is expensive, just look at how much the severance packages cost them. Seeing how microsoft is trying to cut the fat, this is probably the least likely option.

    • Steve Snow

      Sorry V-, I get tired o the whining. If you don’t think you’re paid enough, find another job.
      I’ve been an A-, an FTE, and a V-. Currently a V- I have no complaints. I was able to get about the same $ as I was paid as an FTE and don’t have to work 60 hours a week for it or take part in the twice-yearly review process. BTW, I have an okay benefits package with my Contractor.
      So tired of all the whining from “external” employees. Hope this wasn’t the reason Microsoft will be limiting this type of “gravy” employment.

      • v-

        Steve, you missed the main point of my post.

        I wasn’t complaining about what I make. I was just stating the fact that on average Microsoft employees make more (on a salary basis) and get better benefits than contractors. Even contractors who do the same work, travel as much, work as many hours etc.. I think that this is a direct result of middle management trying to get out of upping their headcount in their group. Thus, making their budgets look much tighter than they actually are.

        I wish it could continue the way it is. Unfortunately, contracting was never meant to do the type of work I do (or many other contractors). I have been here for 3.5 years and have projects that extend well into another 3.5 years. Nothing temporary about that.

        I think upper management has finally acknowledge this and is forcing middle/lower management to make these changes by limiting v-‘s to 18 months. My hope is that instead of forcing us to quit in 18 months, that they hire us on as FTE’s instead.

  • Steve Snow

    The whole situation is idiotic. Microsoft low/mid-management is too immature to be told to budget headcount properly and start justifying FTE positions. I’m guessing top management wants to cap “external” employees at 10% of total. So they just make the excuse of IP protection (which is totally stupid) and reminding people who they work for (really?!). How this company has survived this long, I have no idea.
    And identifying “folks that don’t need corpnet or building access” as a work-around is totally moronic. It’s not a work-around, it’s the policy. But I wonder who this applies to. If your are an external “employee”, I’d assume you need corpnet access at the very least. Someone tell me what kind of positions are being filled by external “employees” who don’t need corpnet access.

    • AnotherVendor

      business guests do not typically required corpnet access

      • Steve Snow

        Business “guests” are not external “employees”. They are “visitors”. If you are doing something worthwhile for Microsoft, you need corpnet access.

        • AnotherVendor

          That’s exactly I was trying to point out as “BUSINESS GUESTS” are the only category of folks who DOES NOT require Corpnet access but are still considered as External Employee as they have unique IDS starting with b- and also can be found out in headtrax, if u know

  • MoreDisqusted

    With vendor contract ew negotiations in full swing, would love to have an update on how this is playing out. It’s been close to a year sine MS announced this scheme. Any signs of second thoughts?

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