As reported earlier today, Microsoft is reducing the rates it's paying for many of its temporary workers, citing the bad economy. Read on for the full text of the company's email on the subject, which we obtained in the course of our work on the story.

To: Allegis Group Services, U.S. Talent Source Program MSP

From: Duff Hall, U.S. Talent Source Program Manager

re: U.S. Talent Source Program changes

Date: 2/20/2009

In response to the realities of a deteriorating economy, Microsoft is sharpening and deepening its focus on cost savings. To support this focus, a number of changes are being made to the U.S. Talent Source program effective March 2, 2009. The changes are detailed below. Microsoft employees with an open agency temporary worker request, an offer outstanding for an agency temporary worker or currently managing an agency temporary worker, have also received notice of these changes. Also noted below are ongoing things that you, as a program MSP, along with the providers of temporary labor resources to Microsoft can do to fully support these changes and optimize your value as a preferred vendor to the Microsoft U.S. Talent Source Program.

The following changes will be effective March 2, 2009, and will impact all temporary agency worker assignments:

• Bill rate "manage point" is being adjusted downward to 15% below mid-point. A SOW amendment to bind the parties to this change has been drafted and agency signature is required in order to receive new requests on or after 3/2/2009.

• Bill rates on all current temporary labor assignments will be reduced by 10%. Some assignments will be exempted from this based on specific and significant agency volunteered reductions following the January Supplier performance reviews.

• All offers to temporary agency workers that are in excess of the maximum bill rate will require justification and Microsoft GM approval for these exception rates.

• There will be no bill rate increases for workers returning to the same role with the same agency following the 100 day break.

• Agency bill rate compliance performance, relative to agency peers for category of request, will be provided to Microsoft requestors as agencies submit resumes for their requests. This will help Microsoft managers make more informed decisions as they pay more attention to bill rates.

U.S. Talent Source program agencies can also expect Microsoft Business Groups to control overall demand for temporary labor by taking various levels of action in the following areas (Agencies will be contacted by U.S. Talent Source program office regarding any BG level controls):

• Reduction or elimination of overtime for temporary agency workers.

• Reduction of total hours worked by agency temporary workers.

U.S. Talent Source program temporary agency role in executing these changes:

• Support the intent of these changes. They are in line with recent Microsoft external communications and are intended to be fair and equitable across the entire U.S. Talent Source program population.

• Limit discussions about issues and concerns with the overall changes to U.S. Talent Source program office. Under no circumstances should agencies or agency temporary workers be discussing pay rates with Microsoft managers.

• Be aggressive in driving bill rates to the new manage point or below. Understand that Microsoft managers are being advised to be more aggressive in negotiating bill rates.

• Continue to ensure that all overtime by agency temporary workers has been authorized in advance.

U.S. Talent Source program MSP role in executing these changes:

• Communicate changes to all program primary and back-up agencies.

• Obtain signatures to SOW amendment from all agencies.

• Host Q&A session with agencies prior to implementation date.

• Act as a conduit between agencies and Microsoft for questions and issues related to changes.

• Provide baseline and ongoing compliance and activity reporting data to Microsoft and agencies to track impact of changes.

• Integrate changes into tracking of SLA's related to program agency performance.

• Continue to provide ongoing feedback to program agencies on their performance to SLA's and relative to each other.