A Microsoft layoff? It's had 8 (small) ones in 7 years

A broader layoff, which could happen next week, would be a major change for the software maker .

In the past decade, Microsoft's steady, uninterrupted sales growth has been matched by only one thing: its steady hiring.

Since 1999 until the end of its 2008 fiscal year on June 30, Microsoft has grown both its revenues and its headcount almost exactly three times. It ended fiscal year 2008 with US$60.4 billion in revenue and about 91,000 employees.

While the broad layoff that could hit Microsoft by next week would apparently be the company's first in its 34-year history, the software maker has had at least eight publicly confirmed nips and tucks in the last seven years, totaling 1,078 workers, or a little more than 1% of its workforce today.

In June 2003, Microosft laid off 34 employees in the XBox division of its Japanese offices, according to Nikkei BizTech as reported by Gamespot UK. The 17% jobs cut was due to the XBox group's underperformance in the highly competitive Japanese gaming market.

In January 2002, Microsoft eliminated its struggling 500-employee UltimateTV group in Silicon Valley, the Associated Press reported. Two-thirds of the workers in the group, which ran the WebTV service, were immediately transferred to other parts of Microsoft.

According to the Seattle Times , Microsoft laid off a total of 233 people in three waves between August 2004 and January 2005. Seventy six were in the XBox group, while 157 total were test engineers whose jobs were being shifted in two phases offshore to India.

Microsoft let go of 72 U.S. call center workers in August 2005 as it shifted customer service work to its expanding India operations.

In June 2006, Microsoft laid off 214 employees in a major restructuring of its U.S. sales force. The Seattle Post-Intelligencer called it "one of the company's larger job reductions on record."

Last November, Microsoft laid off 25 US employees in its recently acquired FAST enterprise search division, according to the online tech mag, Xconomy.

Wall Street will likely applaud a broad layoff. Investors have long complained that Microsoft's headcount growth has hurt profits and Microsoft's stock price, which has been down 44% since July 1, 1999.

Technology analysts may also applaud. Many of them say bloated, unpopular products such as Windows Vista and its failure to keep pace on the Web are a direct outgrowth of Microsoft's engorged workforce and resultant bureaucracy.

Microsoft also routinely reorganizes its business units, leaving some employees, usually those with the lowest ratings in performance reviews, without jobs, in a method of "rolling layoffs," said analyst Rob Helm of Directions on Microsoft.

But a general layoff would also spoil Microsoft's reputation as one of the more humane tech employers, especially after it stopped its practice early this decade of hiring "permatemp" workers to avoid paying stock options and health insurance. And it would be a major drag on the Seattle economy, already hurt by Boeing's stumbles and recent announcement it would layoff 4,500 local workers.

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Eric Lai

Computerworld (US)
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