In what many considered record news for the software giant, Microsoft is planning to reduce its workforce by 5 percent over the next eighteen months, starting with a reduction in force (RIF) January 22 of 1,400. But the roughly 5,000 jobs are far less than the 15,000 job cuts rumored prior to the announcement last week.
What isn’t being mentioned is the rate of employee growth in recent years. Since 2005, Microsoft has grown its staff more than 12 percent each year. In fact, Microsoft plans to continue hiring in what it considers strategically important areas.
Other changes announced are pay freezes, reduction in the contractor force of up to 15 percent, delayed construction projects, and budget cuts in a number of “discretionary” areas.
What this means is Microsoft is not immune to the economic problems rippling through our economy. With Intel’s sales earnings down, it’s not a big surprise that Microsoft is affected, as PC sales were essentially flat in the fourth quarter.
Microsoft has had layoffs in the past, but the number of employees impacted has been small and the actions were not necessarily company-wide. With over 12 percent employee growth over each of the the past few years, it may have been time to make moves towards becoming what some employees call “a lean mean growth machine.” This is not to say I don’t have sympathies towards those who are getting pink slips – being the target of a RIF is anything but pleasant, and even less so when times are tough.
