mslogoMicrosoft employed about 100,000 people directly prior to its acquisition of Nokia’s smartphone business. That’s the employment number the company reports publicly — the “blue badges” who make up the core of its workforce.

But in addition to those employees, more than 71,000 worked with Microsoft as “orange badges” — contractors, vendors and other contingent staff who do a ton of work in the trenches. This is the “shadow workforce,” a number that Microsoft does not include in its public employment figures.

That estimate, from a person with access to the data, gives a sense for how large Microsoft’s contingent workforce has become — more than two-thirds the size of its direct employee base. And it helps to explain why the company’s new restrictions on many of those contingent workers represent such a significant change.

As reported by GeekWire last week, the company quietly sent a memo to contracting firms on Friday outlining a new policy in which all contingent workers will be prevented from accessing its buildings and network for a period of six months after every 18-month period in which they perform work for the company. Theoretically someone might be able to continue working even without that access, but in many cases it won’t be possible.

It’s the latest in a series of major internal changes at the company over the past 18 months. The move follows Microsoft CEO Satya Nadella’s announcement last week that the company will cut 18,000 direct employees, or 14% of its reported workforce, in its largest layoff ever — taking a big chunk out of the Nokia business and streamlining Microsoft’s engineering teams.

I’ve been talking about the contractor policy change with a variety of people — including current and former employees and vendors — and the consensus is that the new policy is a fundamental shift in how Microsoft approaches its workforce.

Microsoft COO Kevin Turner
Microsoft COO Kevin Turner

The company says the intent of the policy change is simply to “better protect our Microsoft IP and confidential information” by limiting access. But if the contingent staff is Microsoft’s shadow workforce, these changes feel to many people like a shadow layoff — a way to quietly cut costs by going beyond the publicly announced layoffs of direct Microsoft employees.

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.

How contracting at Microsoft works

Microsoft has two primary forms of contingent workers, supplied by third-party companies: “a-dash” temporary staff who have traditionally taken a 100-day break after every year on the job; and “v-dash” vendors who can work indefinitely on longer-term assignments.

Some teams are known to hire large number of vendors, rather than direct employees, as a way of getting around internal headcount restrictions. Another common approach is to figure out ways to hire people as v-dash rather than a-dash, avoiding the time constraints.

It’s not uncommon to hear about vendors working in the same position inside the company for many years, in some cases outlasting the blue badges in their groups. Squadrons of v-dash workers can be found at Microsoft in positions such as project manager, principal consultant, marketing consultant, and so on.

contractorpullIn making the policy change, one risk is that Microsoft will see years of institutional knowledge walk out the door after 18 months, perhaps not to return.

“I had some individuals that stayed in one group for almost 4 years but they were really staff augmentation,” one former executive for a vendor firm told me.

The executive explained, “They did this because budgets were getting squeezed and GPG (Microsoft’s Global Procurement Group) wanted them to use a-dash.  But Microsoft project sponsors knew the knowledge was with the v-dash resources. So they would manage the individuals directly instead of doing it project-based through the Vendor. Everyone was finding loopholes.”

V-dash workers are employed by a variety of third-party vendors, including large consulting companies like KPMG, CapGemini and Accenture. For those companies and the contract workers on indefinite assignments at the company, the world just changed.

The new limits promise to make Microsoft groups think twice about using vendors for these types of long-term roles. Some current and former employees I spoke with welcomed the change, calling it a much-needed move to combat “bloat” on Microsoft teams.

The move also puts Microsoft’s a-dash temporary workers on more equal footing with the v-dash vendors. The new policy applies the 18-months-on, 6-months-off rule to a-dash workers, which could be viewed as better than their past one-year-on, 100-days-off rule of the past.

One former Microsoft employee who has tracked the issue closely welcomed this move as a blow to Microsoft’s three-tiered workplace hierarchy of blue badges, v-dash and a-dash workers — a structure frequently criticized for creating management inefficiencies, dead weight and cultural challenges.

But the company might be being more pragmatic than that.

Legal and financial implications

Pradeep Chauhan, a former Microsoft business development manager and the founder of the OnContracting jobs marketplace for tech contractors, explains in this blog post that Microsoft may be addressing the legal liability that comes from employing vendors on contract for long periods of time. (This “co-employment risk,” as it’s called, can cost companies lots of money if contractors are deemed eligible for benefits received by direct employees.)

Workers in the cafeteria at the Microsoft Commons
Workers in the cafeteria at the Microsoft Commons

The move also benefits the company by “empowering” the a-dash program, Chauhan writes. He explains, “For Microsoft, a-dash assignments are much easier to control rate-wise as they are filled through open competition among preferred vendors through their Managed Service Provider program.”

Explaining how this impacts the job market, Chauhan writes, “A number of local consultants and independent contractors that relied on v-dash consulting gigs at Microsoft will be affected by eligibility now. The more experienced ones can’t afford artificial breaks of 6 months causing them to find work elsewhere or raising their rates to cover the downtime.”

The policy is just for workers in the U.S., and doesn’t apply to overseas contracting, but Chauhan notes that the change is especially bad for v-dash workers in the U.S. who are here on H-1B visas, who would need to find alternative assignments.

Wall Street analysts are also watching the situation closely. Rick Sherlund of Nomura Research wrote this morning that the cost savings announced by Microsoft through its layoffs at Nokia and its main workforce may not be as large as investors would have hoped. That could increase the pressure on the company to cut costs elsewhere.

Microsoft reports earnings Tuesday afternoon, and Sherlund predicts that the company may have more to say on the topic of its “shadow workforce” of contractors during its conference call with analysts.

Click here to read the full Microsoft memo to vendor companies, outlining the new policy for network and building access.

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  • Evil Kitty

    This sucks.

  • Strunkwhite

    Just to be clear – this change only affects V- contractors. Since 2002 MSFT has required A- contractors take a 100-day break after 12 months. A breakdown of relative numbers (A- and V-) would shed light on the impact of the new policy.

    • Todd Bishop

      Thanks for the note. You’re correct that a- contractors have traditionally been required to take a 100-day break after a year of work, as I noted in the story, but this policy change actually impacts them, too. They will shift to the 18 months on, 6 months off approach as well.

      The stats I have access to show a much larger number of vendors, about 65k, compared with about 7k other contractors, as of late 2013.

      • sarahschacht

        Todd, any estimates on total number of local Microsoft contractors?

        • Todd Bishop

          Good question, Sarah. I don’t know the answer but will try to find out.

          • Jewelya

            I have heard 80k from someone who probably has reasonably accurate information.

          • J242

            Sorry to bother you but have you found anything out on this? I think all of us would like to know a valid number as there are a host of wildly varying numbers being tossed about from 15K to 80K and more…

          • margaretbartley

            So this is now two months later. Have you been able to find the answer to this question?

      • 3D Artist

        It effects both equally. Even though a A- can now work six more months they have to take off six months that is also the extent of unemployment. There is never a guarantee of employment when that six months is up. When you were dealing with 100 days you would try to contract as much as you could but if work was dry you had a few months of unemployment buffer. If you are an artist working for game studios you cannot go to any microsoft studio during that time off.

        • J242

          6 months is not the limit on WA state UI. It’s 52 weeks (1 year) not counting any federal extensions.

          • 3D Artist

            Not sure where you got that info but the UI is 26 weeks. After that time frame federal extensions can take place but as of now is non-existent. I should actually say 26 weeks worth of pay. If you get contract work during that time frame you will not get unemployment money but will start up again once the contract is over. The 26 weeks does not have to be continuous.

          • J242

            I’m getting this from the WA state Employee Security Department:

            How long can I get benefits?

            Your claim is good for a “benefit year,” which is 52 weeks, beginning with the week you file your application. You cannot file a new claim in Washington until your benefit year is over, even though you may have received all of your benefits. Most claims receive between 13 to 26 weeks of benefits.


            Where are YOU getting YOUR information from?

          • 3D Artist

            Your claim is good for 52 weeks but you only get up to 26 weeks worth of pay i.e. the 13 to 26 weeks. As I said if you freelance every other week then you claim will last 52 weeks. After that 52 weeks is over you have to re-file for the claim again. Trust me I am on my second a- position and was a week from being out of money on my last 100 days off.

          • J242

            The last time I was in between contracts I had full benefits for 2 years. I know that the 2nd year was on behalf of the federal extension but the first full year was WA.

            I have been contracting as an A-, V- and FTE (of companies other than MS) for over a decade & a half. The very few times I’ve ever been searching over 6 months the benefits were still in place. If there has been a change in how much is paid out or the length of time benefits are covered, I haven’t read about it so please provide the documentation so that I can better understand.

          • J242

            “Your claim is good for 52 weeks but you only get up to 26 weeks worth of
            pay i.e. the 13 to 26 weeks. As I said if you freelance every other
            week then you claim will last 52″

            If you freelance, you don’t necessarily have a specific, steady income week after week. I’m talking about working 40 hours a week for the same rate week after week after week for a year plus THEN collecting for 3 three months, then renewing the contract for a year over and over again. The amount paid INTO the system at that point allows claimants to collect the maximum benefit for a longer period of time. If you freelance with some weeks paying $15K and other weeks paying $300, UI draws the average and associates the amount of benefits paid out accordingly. If I am making $1,400 a week while working and working for 3 years I will have more benefits than someone making $300 a week for 6 months and my benefits should last longer as well because I’ve paid more into the system. Maybe I’m misunderstanding something here but I only have my own experience to go from on this case.

          • J242

            If they have changed the laws about UI that is something I definitely want to know more about! I have had to claim UI in over 3 & 1/2 years but based on MS’s actions I’m sure I’ll have to go through it again sooner than I’d like.

          • 3D Artist

            The state laws have not changed, What has changed is the federal extensions. Under Bush the government extended it under federal subsidies to 37 week and then under Obama it peaked at 99 weeks. There also was a federal program for awhile that subsidized Cobra too. The extensions ended in December of 2013. this link explains the current situation.

            These are not fun times. Hopefully the extension will get passed to help with a safety net but as of now I need to look into a new career direction because Contracting for Microsoft is not longer financially viable.

      • J242

        I highly doubt MS would do what Amazon did and offer the ability to interview for their roles as FTE either. This just seems like MS tossing good people away on yet another fanciful whim of theirs and I think it’s going to end up biting them in the long run.

        • Xanwho

          It also assumes that those contractors WANT to be FTE. Most every contractor I know is a former FTE (myself included) and have no desire to return to this status because of politics, work-life balance, or other issues.

          • J242

            I for one would at least appreciate the opportunity and experience to be an FTE regardless of any potential hassles. If MS were to offer my team FTE positions it would restore my faith in the company as they would be willing to give us the choice instead of just showing us the door. I know that the politics and reporting on your “goals” and progress constantly can seem overwhelming, intrusive and just plain unnecessary but giving people the option would go miles with the people being effected by this.

        • margaretbartley

          Over the years, Microsoft has invested billions of dollars directly in building training centers in India and also building up the Indian Institute of Technology schools. They are training hundreds of thousands of future employees. It’s not like MS is going to run short of employees. Plus, if you look at the differences between the conferences put on in India, where they are hard-core tech (costing about $100), and the US, where the cost is closer to $1500, and they are mostly sales and deployment, you will see that Microsoft has made a very deep commitment to moving their core production overseas. The Redmond campus is more of a conference center and sales center, a corporate big-wig place.

          • J242

            Except for the fact that the overwhelming majority of XBox, XBL, Windows, Windows Phone, Office, Azure, MSN, Powershell and games testing/development is local. All of the groups have labs for the day in/day out support/testing in Beijing & Belgium among other cost centers but the management and primary development is all local to the US.

          • margaretbartley

            Reminds me of the days back about fifteen years ago, when corporations were first setting up their Asian factories, and workers refused to believe that millions of Americans would loose their jobs.

            Don’t look at where the work is being done now, look at where the investments are going, and it’s not in the US. Jobs follow investments.

            The whole point of this six-month period is to see what jobs can be easily transferred, and which ones are going to need more attention.

    • Bill

      Except for those non-USA vendors. Say hello to more contractors based in India. Coincidence?

      • Xanwho

        It should be noted that if the FTE manager is located within the US they cannot hire replacement contractors outside the US. While there are obviously ways around this, it’s not quite as easy as it seems at first glance.

    • J242

      Actually, it does effect the A- contractors as well seeing as now they can work up to 18 months but then have to take a break twice as long. I used to be an A- and it worked perfectly because my core team only had need of me for a year at a time and then took 3-4 months to plan out and prepare for the next cycle. Being forced to take a 6 month break will have teams filling their roles before the A-‘s can go back to their previous teams and in the process, a lot of experience will get lost.

    • Evil Kitty

      1. V- contractors account for far more people at Microsoft.
      2. A- contractors will also be affected in the same way, according to the memo I received – they also must take a six month leave of absence between gigs, and the non-compete for contingent staffers is very strict, so getting work with another company in your field of expertise is severely limited.

      • J242

        However, the A-‘ers aren’t limited to only 6 month contracts (with 1 renewal opportunity for a total of 12 months on-site) anymore and V-‘ers have to spend a minimum amount of time off-site between projects making A- and V- almost the same. Now it’s just “Contractor” vs “Actual Employee (i.e.; FTE)”and doesn’t give highly skilled employees any motivation to work harder than they would for an in-between hourly job. Up until now, as vendors some people had hope in being given the opportunity to climb the ridiculously sloped ladder to make a name for ourselves and go FTE. That’s out the window now.

        I prefer the way Amazon handled things. More abrupt for sure but people were able to interview for direct positions which gave them some growth potential. What MS is doing is just blowing off a massive % of their workforce for no valid reason.

  • sarahschacht

    Did anyone else notice the non-US based contractor loophole and how this could contradict MSFT’s “IP security” claim? It appears local or US contractors can only stay on 18 months, but those based overseas can work indefinitely.

    • Slam1263

      H1-B’s protecting H1-B’s families.

    • jamieh2

      The “IP Security” claim is total horses***. This has nothing to do with security or IP.

    • Bill

      This is quite possibly the most important comment here. The good news in this whole thing is that Microsoft will self destruct very quickly now due to the abysmal work provided by offshore workers.

      Mediocrity on steroids. Great strategy.

      • margaretbartley

        I remember the days when “Made in Japan” was used as a generic statement about shoddy production. In the 1970s, Japanese electronics destroyed the US TV and radio business, and almost took down Detroit.

        I remember the early days of Chinese manufacturing, when they were focusing on toys, and did some crappy tool production.

        How many computers are now being made in the US?

        It’s very foolish to not notice that jobs follow investment, and ALL the investment is being made in Asia.

        It’s an interesting discussion to talk about quality vs price – and why the quality of goods seems to be decreasing, whether it be airline travel or cookware or hand tools. The fact is most people would rather pay a little less to get a whole lot less than to pay for quality, and the quality manufacturers have pretty much been driven out of business.

        Whether the offshore workers do abysmal work is irrelevant. They are much cheaper and much less likely to go off and start their own company than US workers, and soon they will be the only ones doing the work.

        Get used to it.

  • Randall Lewis

    “Wall Street analysts are also watching the situation closely. Rick Sherlund of Nomura Research wrote this morning that the cost savings announced by Microsoft through its layoffs at Nokia and its main workforce may not be as large as investors would have hoped. That could increase the pressure on the company to cut costs elsewhere.”
    In other words, Sherlund (wrong about most things) is going to claim this massive layoff wasn’t enough and that Microsoft still needs to sell off the parts he doesn’t like. Not surprising, the man only knows one tune.

    • boop

      At one time or another, I have been a FTE, an a dash, v dash and MSFT shareholder. Wall Street analyst thinking like Mr Sherlund’s makes me ill.

  • ExFTE-CurrentVendor

    This decision from MS angers me. I am currently a v-and also an ex MS FTE of 12 years. My husband has is also an FTE as an Engineer (going on 18 years). I left MS 4 years ago to spend more time with my children. As an FTE, I simply burnt out and could not get the work-life balance I needed for my family. I am now a v- working part time. I’ve been on my current contract for over 3 years. It works well for my client, because I have in-house MS experience which allows me to quickly and efficiently navigate the crazy internal workings of MS and internal historical knowledge of our particular area within the company. I do agree that v- are often treated as 2nd class citizens, but on the flip side, I am also now leading a more balanced and flexible life. It’s a fair tradeoff and a win-win situation. Until now.
    When I was an FTE, I was a group manager, managing 5 FTEs at one point and about 10 vendors. The vendors were a combination of PM/IT support + strategic partner employees that ran operations for our 3rd party system that we used for marketing.
    When I think about both my experiences as an FTE and now as a vendor, I struggle to see how this is a good thing for MS. I agree that MS is way too bloated and reliant on contingent staff. However, I think a mandatory policy to force them out in 18 months is not the best way to manage it. (For the record, I think the IP concern is BS). This “strategic” decision seems awfully short sighted. Here are my reasons why:
    1. Over the next 18 months, there will be a huge exit of talent. I’m guessing at least 50% of people in Redmond are vendors. Some are very operational and can be replaced with modest or minimal pain. However, many are in senior level roles, leadership roles, and other critical positions. MS will lose these people as their job security and continuity has now been threatened. I will likely be one of those people looking for a new role. I have a family and require something that is more stable than an 18 month deadline. The good news, I guess, is that I have 18 months to do this. But losing good talent is NOT what MS needs right now.
    2. This is going to be a huge hit to local consulting companies that depend on MS for most of their business. It’s a good opportunity to diversify, but it will be a painful process and I think some smaller firms won’t survive it. Also, many of these companies are strategic partners, helping MS to innovate, become more efficient. MS has now hurt these relationships and potential relationships with future companies. If MS won’t make exceptions for these strategic partners, why would these companies invest their time in MS? It does go both ways.
    3. As an MS FTE, this isn’t good. When I was an FTE, I burnt out. I was a great employee, always ranking and earning the highest performance ratings. Without my vendors, I would not have been successful. This does NOT imply that I was lazy and not wanting to do my work. I’m annoyed with those that say that’s the only reason MS FTE’s have vendor support. Absolutely incorrect. MS FTE’s rely on vendors as additional arms and legs to be able to make more things happen. Demands are competitive and aggressive. Especially after the 2009 recession, every vendor resource needed to be justified. Hiring new V- support to replace the previous intellectual knowledge will be a huge burden to the FTE. And for their sake, I hope it doesn’t all hit on Jan 1, 2016. FTE’s are going to be overworked, more than they already are. That’s a really bad thing and could lead to more unwanted attrition.
    4. Vendors will no longer have any long term invested interest in Microsoft. Loyalty is a subtle reason behind a company’s success. This is going to hurt MS.
    5. Local tech companies like Amazon should be happy about this. They now have a much larger pool to cherry pick from. How does this help Microsoft?
    Having said all that, I’m hoping Microsoft will rethink some of this. This decision seems pretty drastic. I’ve got to think that there are less painful or more gradual ways to achieve the same long term goals they have.

    • jamieh2

      I wouldn’t hold your breath on Microsoft rethinking this. The reason Microsoft has been going downhill for the last 10 years is that management never pays attention to anything that is going wrong until it causes huge issues for the company. Hence you have Apple & Android coming in and pretty much evaporating Microsoft from all consumer platforms with phones and tablets while Ballmer sat there twiddling his thumbs and doing nothing.

      This is one of the new CEO’s first “big” proclamations. Backing off on it would confirm that he is a knee-jerk idiot who jumps into things without knowing what the hell is going on, so he will likely ride his terrible decision into the dust.

      • margaretbartley

        No, it just means his vision is to transfer the talent to Asia. He understands this will cost something in the short run, but in the long run, he sees that as the sweet spot for MS development.

    • Granpa0

      Perfectly stated.

    • masher

      There are plenty of options available to Microsoft (offshoring, work visas, etc). They have plenty of labor available and they don’t need you but they do need federal help (H1B and other visas) to keep things this way.

  • Kurt

    It seems to me that this has the potential to create more security risk, not less. If you have a legitimate need for ongoing v- help and have to cycle through a new person after 18 months, then you end up with more people having access to Microsoft’s systems, buildings and secrets overall, not less.

    There are some functional areas where this will really hurt Microsoft. Say you run a PR group and have 5 people from your PR agency who work for you as v- contractors. PR agency personnel are legitimate outsourced roles at Microsoft, not ones where you would normally have the person as an FTE. These PR team members are very close to, and have intimate knowledge of, your business, as is the nature of such roles. They need access to Microsoft email and systems and are often on site. Some of the team is on your business close to full-time, while the others split their time between your biz and other companies. Under these new rules you’d have to swap out all the PR folks every 18 months and bring on new ones. That’s on boarding a new person every time. That’s 5 more people who all have access to some of the business’ most sensitive info. That’s 5 new people that have to establish new relationships with the media that cover the business. In an example like this the effect is the exact opposite if what the company wants: It costs Microsoft more money and exposes even more people to its IP.

  • Guestnonymous

    Before July 1st 2014, could an FTE who left on good terms come back and work as a v- or a- without taking a break? Seems like after July 1st, they would have to take a 6 month break before doing so.

    • MadManMike

      Yes they could. Now if a FTE is laid off or quits they have to wait 6 months before they can work here. This essentially prevents all the FTE’s who recently got laid off from coming back to Microsoft as contractors.

      • Guestnononymous2ElectricBugalo

        So in previous layoffs, if you had skills that were needed by a team and were laid off from that team, they could at least hire you back as a vendor to help leave things in a good place.

        • Anonymous

          Actually that is illegal. You can not lay someone off and then hire them back as a vendor immediately. There are federal laws prohibiting this. It is also technically illegal to lay off US citizens and retain H1B staff, however I know for a fact this is occurring.

  • MadManMike

    This also does not make sense for the Microsoft Hardaware V-. Most all of us are Electrical Engineers, working side by side with FTE’s. There are tens of thousands of us working for Xbox and Surface alone. I have been working my current contract for three years. I work on site and use company resources on a daily basis.Meetings, Emails, Schematics… all company resources that I would not be able to access for those 6 months. In other words, I would not be able to do my job. Thus I would be forced to quit my contracting company.

    This will destroy Microsoft hardware, no questions asked.

    Also, you better believe they will start laying contractors off well before the 18months is up. Microsoft isn’t going to layoff 60,000 people all on the same day.

    • jamieh2

      I think Nadella WANTS to destroy Microsoft Hardware. He just doesn’t have the balls to come right out and say it.

    • Guestnonymous

      Don’t many SOWs run until June 30, 2015 anyway (if not ending sooner)? Seems that July 1st, 2015 might be when you hire new people and start the 18 month clock vs. extending someone 6 months and having to find resources in December 2015.

      • mpguest

        Some SOW’s were changed to 3 months very recently before the announcement.

    • RightOn123

      I worked as a v- for three years in MS hardware, and can absolutely attest this will be crippling there. It was well known and joked that FTE’s go to meetings (managers) while v- were needed to do the actual work. MS management insisted on treating these positions like anyone with the “right” credentials could just pick up where the last guy left off. Any technical engineer can tell you that’s ridiculous. I saw paperwork that pegged the number of contractors as 60% of the Puget Sound workforce, though I don’t know further breakdown (probably some repeats, short-terms, etc.). This will be a huge loss of tribal knowledge. Look for serious consequences in about a year.

  • James Murray

    Thank you MS, thank you for totally fucking me after 15 years of contract work, blood, sweat, and tears. Thank you SO very much for making claw and fight my way into a V- position finally, only to kick me back to square one.

    They’ve just totally blown what little security I had right out of the water.

    Thanks ya bastards.

    • 3D Artist

      As an A- knowing that it is almost impossible to become a FTE I at least had the carrot of a V-. Now that is gone. I am sorry to hear it.

  • Idontthinkso

    Time to unionize.

  • RuthlessBitch

    Satya is digging Microsoft’s grave. It will be a slow painful death!

    • balls187

      Not unlike the past decade…

  • margaret Bartley

    I haven’t seen anyone mention the return on investment that Microsoft is looking for in their billions they have spent setting up training centers in India. For more than 20 years, Microsoft has been building up teams of skilled developers in India. How long do you think they are going to keep their Puget Sound techies? How much has MS spent on training US workers? Why do you think Rep.McDermott and Senators Murray and Cantwell are so gung-ho to authorize hundreds of thousands of new IT guest workers?

    What does that tell you about their future plans? This is clearly the start of a major transfer of jobs from Seattle to India. Like when Boeing moved their headquarters to Chicago, this is a harbinger of things to come, and the wise are already polishing their resumes and updating their job skills…

    Microsoft to invest $1.7 billion, add 3,000 jobs in India, Gates says (2005)

    Microsoft to invest $400 million in India (Nov, 2002)

    “Money Control: Microsoft India’s employees to see minimal impact from layoffs
    Thanks to the geographic importance of the India market, a Microsoft
    spokesperson has confirmed that the Indian workforce will experience a
    small fraction of the 18,000 expected job cuts. This global move comes
    as the software major incorporates Nokia’s operations and aims to
    strengthen Windows Phone sales..”

    Later on, on the same page, they say that India is second, behind the US in mobile phone market, so it looks like MS speaks doublespeak to its Indian market, as well, giving a different, but still phoney, reason to India.

    • Steve

      Innovation is truly a U.S. cultural thing. You can’t offshore it. Kind of like “Designed in Cupertino” and manufactured in China. But I would bet that manufacturing will come back once the robot manufacturing technologies get even better.

      • margaret Bartley

        When auto manufacturing and consumer electronics moved to Asia, it took a decade or so for the designing and innovation to move offshore as well, since it takes a generation or two for the culture to mature.

        HP started the off-shoring of IT work back in 1990, and a few years later, all other computer companies were following suit. I lived in Bellevue in the mid-90s, and the Bellevue paper had several stories about the substantial investments local companies were making in India. Even more so, the Asian financial press was filled (several articles a day, every day, for years) with stories about American computer companies, and American government programs investing first millions, then tens of millions, and then hundreds of millions of dollars moving the high-tech sector to Asia.

        I suspect the dot-com bubble burst was due more to the fact that Global Crossing finished it’s trans-oceanic high-speed fiber optic cabelling in 2000 or 2001 than to any of the nebulous causes cited by various pundits here. By then, the global corporations had built up their development centers in Hyderabad and other cities, and the Silicon Valley-based companies started by Indian nationals with the easy American capital moved their operations to India, and pulled the plug on Silicon Valley.

        I don’t understand this obliviousness people have to the effects of investment. Jobs follow investments, and those investments are taking place in Asia. It seems we have to splat on the ground before people notice that we’ve fallen off the roof.

        Then all the media can come up with their “ain’t it awful?” stories.

    • J242

      Don’t forget about MS’s “Chinasoft” facilities in Beijing.

      • SteveB

        You mean all the Testers? That is the best they can do?

        • J242

          There are more than just testers over there. They have folks planning and working directly on changes for the mainland China releases including but not limited to testers, LCA, PMs, SDETs and PUMs. A good majority are for testing, yes but not unlike in Redmond, there are administrative and developer resources surrounding them. Keep in mind, this was only in response to MS’s India off-shoring.

        • RightOn123

          I worked with people in China MS was trying to have take over engineering changes on some products. Don’t think for a minute MS wouldn’t prefer cheap, overseas labor where ever possible.

  • Bill

    The takeover of Microsoft by India is now complete. I work numerous times for MS (a- many times, v- many times, and an FTE) for Microsoft since the early 90s.
    I predict that the “cultural” change will flop for Microsoft the same way every project that has been offshored to India has flopped.

    Notice that non-USA contractors aren’t held to the 18 month limit? I guess “IP Protection” wasn’t really the plan–not that MS has any IP worth protecting. Apple, Google, and Amazon have been cleaning the MS clock for quite some time. When is the last time you bought (or were forced to buy) a MS product that made you think “innovation”? Windows Phone? Nope. Windows 8? Nope. Zune? Lol. Nobody buys that stuff because it sucks.

    Microsoft is trying to turn into a company like IBM, but they cannot even do that right. I predict very bad things for the company. If I still had any of their stock (besides being a complete idiot by holding on to it), I would sell it today.

    Goodbye Microsoft.

  • Thumper

    From an investor stand point I see where the quick cost cutting would quickly increase stock prices. FTE’s have great benefits and M$ is asking for a return on the compensation that they are receiving. Over the next 18th months there should be a reduction in the responsibility and access that is granted to vendors. This will protect M$ from disgruntled vendors. For the vendors that are of value to the organization bring them on full time.

    • peted66616

      There is a lot of speculation going around, most of it negative. And the negative speculation could be correct, but this positive slant could just as easily be correct.
      One strong motivation for many v- workers is that the contractor relationship gives them flexibility and isolation from corporate bureaucracy that being an FTE would not.
      It’s true that if the ~80K vendors all depart after 18 months, Microsoft will be in a world of hurt. There are far too many critical functions served by at least a large portion of those vendors for the company to survive such an exodus.
      But if Microsoft (Nadella) has as part of this move a plan to fix at least some of the bureaucratic problems surrounding full-time employment at Microsoft, many of those vendors could wind up being re-hired as full-time employees. Note that the policy applies to external employees only; presumably, someone who is moved to the full-time roster would not be restricted by the new policy.
      If Microsoft can reclassify existing v- workers as full-time while still providing similar work environment benefits, this could wind up being a good thing for both Microsoft and the workers.
      Of course, that’s but one scenario among many, and the other scenarios don’t play out in such a positive way. But for the moment, it’s way too early know for sure what the actual implications of the policy change will be.
      Not that, this being the Internet, that slows down the rampant nabobism. But it’s something for the more rationally-minded of us to consider.

      • J242

        I have my fingers & toes crossed that the transition to FTE happens for V- folk who have been on staff for years but unfortunately, I highly doubt it.

      • RightOn123

        Having been a v- at MS, it seems almost mandatory that some would have to be turned FTE for MS success sake. I too highly doubt that will happen, given the management and investor push for this as a method to blindly reduce costs.

        I saw a lot of jumps at MS due to grand schemes devised in isolated, ivory towers, with little understanding of the nuts and bolts. I don’t believe it is possible to create better products, services, and market share that way.

  • Johnny Neumonic

    Don’t forget the 15% pay cut that Microsoft might be asking v- employees to take:

    • Robyn Ann

      Dead link?

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  • Robyn Ann

    Let the negotiations begin! My personal budget for the next two fiscal years did not have a 6-month break planned. I will need to renegotiate my current or seek a new one quickly to help substantiate the new requirements. There will be a brain loss for sure as overseas models tend to focus on process of existing products, and letting the US inspire innovation. Unfortunately, it seems there will likely be a void in that as well for MS as experience moves on to other companies.

  • Granpa0

    The problem, as I see it, is that currently Microsoft employs many v-dash vendors in positions that should otherwise be filled by full time employees, so they’ve got themselves quite a pickle. Many of these positions have at least a 6 month ramp-up time, so to fill these positions, managers would only get about 12 months, if lucky, of actual productivity from these vendors in between 6 months of complete non-productivity while they ramp up. This is massively counterproductive. This is going to create massive problems for a lot of roles that are currently filled by vendors. Not only are they going to lose a lot of talented folks currently employed as vendors (because anyone worth their salt is not going to take a job where they are going to be unemployed for 6 months at a time), but also some very talented managers that are going to get fed up with the process. I’m curious to see what MS is going to do about this.

    • J242

      If they stay true to form, MS is simply going to expect the FTE staff to try and handle the extra workload and then be held responsible when they can’t handle the work of the multiple vendors they are forced to replace.

  • inthecloset

    Actually what is happening if you carefully read the memo is the shift to using the B1 / B2 US Visa program to get around the H1B visa limitations. Any business can bring a person who is paid by an offshore company to the US typically for at least 6 months without restriction. The net of this is Microsoft has a large division in India they send the people to the US on a B1 visa but is being paid by the MS India division either as a contract employee or a FTE. Since MS India employees are paid pennies on the dollar it makes a lot of sense for them to have them do the bulk coding jobs as well as much of the 1st tier support work. The 70k – 80k v- and a- people could get hired as Indian import workers if they are willing to be paid in rupees (a few hundred dollars a month). The problem is with innovation. I know Indian workers are very smart and can code very well. However from a cultural perspective they are not trained to do innovation or to challenge the status quo. The net effect of this will be the net loss of innovation for Microsoft. All you need to Google innovation or inventions. You will see the countries that are innovating and who is not.

    • J242

      The support outsourcing has always bothered me. Look at Apple, they have support in every country they have a large presence in. Call Applecare in the US, you speak to someone here in the US. Call from London, you speak to someone in England. Does it cost more up front? Yes. However, which company is more profitable and has a higher customer satisfaction rating? A little more money upfront can (if handled properly) end up with significantly higher returns. I wish MS would stop being so short-sighted and forming their decisions based around their stock valuation.

      • inthecloset

        I agree due to miscommunication and cultural misunderstandings offshore support rarely works except for the most basic stuff. The support for the country should be in that country. If a business does not do that the customer satisfaction suffers.

  • John M. Cooper

    It was 90 days. I was an A- from 2009 to 2011.

  • LEB

    I may be changing directions on my career path at the end of my Microsoft vendor assignment in Jan/2015, due to Microsoft new vendor guidelines. When January/2016 occurs the flood gates will open for around 15,000 to 30,000 vendors looking for a new positions outside of Microsoft. I don’t want to be part of that stampede! I will be looking for a permanent position or contract work at companies like Amazon, Expedia, etc.. Although my preference is to stay at Microsoft, I am not sure taking six months off every 18 months is in the best interest for my career. I am still undecided so will be open to all options. I had a good run at Microsoft (2005 – 2015) but must approach this as an opportunity to expand my career horizon!! Linda

    • J242

      Right there with ya. Best of luck to you in your search!

  • Theotis

    Why do people associated with Microsoft use the term FTE incorrectly? An FTE (Full Time Equivalent) is a unit of work of an employed person which can be fulfilled by either an employee, vendor, or contractor. Microsoft people appear to use the term to refer specifically to employees.

    • g

      It is actually Full-Time Employee when used to talk about employees

    • J242

      The term is not being used incorrectly as at Microsoft, FTE = “Full Time Employee” or “Blue Badge”. All Blue Badges are FTEs, period. All employees working for MS through a secondary company like a contracting or vendor firm are a- or v- “assets”. MS also often has dozens of “Project Managers” who are actually just STEs or SDETs. It’s their language, not the standards observed by the rest of the industry.

  • danacre

    Satya will just open a giant backdoor, no interviews for Indian contracting firms like Infosys to smuggle in half-literate Indian contractors into FTE workforce.

    They are already promoting Indian testers into engineers without interview process, and laying off competent American engineers.

  • Jose Johnson

    A potential contractor must have the necessary credentials and experience to do the job perfectly. A good way to choose a contractor is to interview them. So This will assure you of good customer service.

  • Lucas Brown
  • masher

    There is so much labor available in the labor market that Microsoft has these types of options. So the real question is: why is the US federal government siding with Microsoft and issuing work visas to Microsoft? How can a corporation like Microsoft have massive layoffs and then come up with schemes to push out contractors and then claim to have a “critical labor shortage”?

    Clearly there is not a labor shortage and all the work visas do is help corporations push down wages.

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