Microsoft (MSFT) recently laid off 1400 employees with an eye towards a total headcount reduction of up to 5000 jobs, the largest job cuts in its history.
But it’s not just the full-timers who are feeling the squeeze. Yesterday we learned the company also plans to cut the salaries of its temp workers by 10%, with further rate cuts of up to 15% in the future.
Not a wholly unexpected move — Steve Ballmer recently promised financial analysts Microsoft would cut expenses where it could, while still committing to a broad R&D spend.
Seattle-based TechFlash has Microsoft’s memo, outlining how the cuts will work.
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
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 labour resources to Microsoft can do to fully support these changes and optimise 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 labour 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 labour 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 authorised 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.