How Microsoft is cutting back |
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How Microsoft is cutting back
Microsoft this morning announced a broad strategy for weathering the economic downturn -- starting with thousands of layoffs but also cutting budgets for marketing, travel, real estate and previously expected employee raises. Here are the basics of the company's plan.
JOB CUTS: Microsoft will eliminate 5,000 jobs over the next 18 months, starting with 1,400 positions immediately. The company says the cuts will take place across research and development, marketing, sales, finance human resources and information technology. However, it will still hire in "key investment areas."
NET EFFECT: A decline of 2,000 to 3,000 in headcount over those 18 months. Microsoft currently employs more than 90,000 globally and 40,000 in the Seattle region. The company isn't saying how many of the cuts will take place locally, but given its concentration of workers here, the number is likely to be substantial.
CONTRACTORS: The cuts above will take place among the company's direct employees. In addition, Microsoft appears poised to make more cutbacks among its contract workforce. Microsoft CEO Steve Ballmer said in an email to employees that the company will make "significant reductions in spending on vendors and contingent staff." No further details were given on that point.
MERIT PAY: Microsoft is eliminating pay increases that were expected to take place in September for the 2010 fiscal year.
TRAVEL: Twenty percent decrease in spending.
REAL ESTATE: Microsoft confirmed plans to cut back on its real estate expansion, as reported earlier this week.
About Todd Bishop
Todd Bishop is co-founder and managing editor of TechFlash. He has covered Microsoft and the technology industry for more than five years, most recently as a daily newspaper reporter and blogger based in Seattle.
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