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Jan. 1, 2016, is marked on many calendars — and weighing on many minds — at Microsoft these days. The date marks the end of the first 18-month period since Microsoft instituted its policy requiring “external staff” to take a six-month break after every 18 months on the job.

The new rule is a major shift for the tens of thousands of contractors, vendors and other contingent staff who work for the company through outside firms — people commonly known as “orange badges” on the Microsoft campus.

It’s also a big change for the “blue badges,” the internal Microsoft teams that have historically relied heavily on external staffers to help build, test and market the company’s products.

But as the deadline approaches, some exceptions are emerging, appearing to cushion the blow of the new policy in certain situations. Several Microsoft contract employees tell GeekWire that their firms have been granted exemptions to the new rule, classifying them in such a way that keeps external staff on the job beyond the 18-month limit, without the required six-month break.

In other cases, internal teams have arranged to keep external staff working on their teams, but remotely. That’s because the new rule does not not technically require a break from working, but instead requires a break in network and building access.

People inside the company say the 18-month buildup has given some vendors time to adjust and prepare for the change — either figuring out how to keep people on the job without direct access, or training others who can step in and fill roles when existing staffers take the break.

Microsoft, which doesn’t disclose numbers about its external staffers, declined to go into detail about the impact of the new policy in response to our questions this week, but the company reiterated its stated reasons for the change.

“We’ve instituted this simplified policy to align with broader industry practices and strengthen protection around Microsoft’s confidential information,” a company spokesman said via email. “The policy was announced and went into effect on July 1, 2014 and requires that external staff have a break in network and building access after 18 months of such access. We value the partnerships we have with our supplier companies and the external staff they employ and have worked closely with our suppliers since then to plan for these policy changes.”

Microsoft CEO Satya Nadella
Microsoft CEO Satya Nadella

But even with the exceptions and adjustments, it’s one of the most notable behind-the-scenes changes in Microsoft’s approach to its workforce since Satya Nadella became CEO almost two years ago, in early 2014.

The company traditionally 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 could work indefinitely on longer-term assignments.

With the new rule, both classifications of external workers are being required to take a break after 18 months on the job.

“Most MSFT’ers believe it is a stupid rule because they have relied on v-dash for quite some time for resources,” said one former Microsoft vendor via email this week. “Tends to be more experienced consultants which they like and what the original v-dash was for. But a lot of the staffing firms got v-dash credentials which messed up quality and bidding on projects. With the turn to more of an engineering organization again under Satya, which is a good thing, needing a-dash and v-dash is less of a need. That’s the theory anyway.”

In the short term, the change could ripple through the rest of the Seattle region’s tech workforce, with some people who have been working for extended periods at Microsoft now in the market temporary or permanent jobs at other companies.

The new rule was put in place around the same time that Microsoft separately announced plans to cut 18,000 jobs — direct Microsoft employees — in the largest layoff in the company’s history. Since that announcement, the company’s total employment has dropped from 128,076 to 115,905 people worldwide, and from 43,351 to 42,991 people in the Seattle region, as of September of this year.

Those numbers don’t include external staffers, who were estimated to exceed 70,000 people at the time of the 2014 announcement — a sizable “shadow” workforce that traditionally plays a big role inside the company.

“While network and building access may be required to effectively complete project work, we often have effective means of working together without granting access,” read an internal memo obtained by GeekWire at the time. “This policy will help our sponsors to make thoughtful decisions regarding network and building access to strengthen protection of Microsoft’s confidential communication.”

At the time, Mary Jo Foley of ZDNet cited an email from Microsoft chief operating officer Kevin Turner to the company’s sales and marketing group, saying the plan inside that group was to “reduce our reliance on contingent staff augmentation by over 20 percent year-over-year.”

Are you a Microsoft worker or employee impacted by the change? Tell us your story in the comments below or email todd@geekwire.com.

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