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Friday, July 18, 2014

In Addition to Those 14,000 Layoffs, Microsoft Is Tightening the Screws on Its Vendors

Posted by on Fri, Jul 18, 2014 at 5:44 PM


This week, Microsoft announced it would cut 18,000 jobs—14 percent of its employees and the largest mass layoff in company history—but that number did not include Microsoft's vendors, also known as its "shadow workforce."

These people aren't officially on Microsoft's payroll, but there are a lot of them—a Seattle Times story from 2009 estimated there were around 70,700.

According to a memo sent to The Stranger this afternoon, they're all losing their jobs in the next 18 months with an option to reapply 6 months afterwards. From then on, they'll be restricted to 18-month rotations with 6-month breaks.

The memo:

Hi, [redacted]

Many of you may have heard the announcement today that a new mandatory break in service policy has gone into effect. This effects everyone on both a- and v- assignments. Moving forward, all Talent working at Microsoft (a- and v-) will be subject to a mandatory break in service after 18 months

Anyone currently on an a- assignment can now work 18 months before taking their break in service. Talent on assignment prior to July 1, 2014, may be eligible to perform services for the duration of their original 365 days, plus an additional six months to bring them in-line with the new 18-month access policy. (Note that this is still contingent on budget and need.)

Everyone on a v- assignment will also have a break in service. Talent on v- assignments as of July 1, 2014 may continue assignments for up to 18 months that is, until January 1, 2016.

The new break in service term is now 6 months for all Talent (both a- and v-). For a- Talent, this applies to anyone who completes their 18 month term limit after July 1, 2014. For v- Talent, the break will be effective January 1, 2016...

Any Microsoft employee who separated from Microsoft on or after July 1, 2014, will be required to take a minimum 6-month break from access between the day the employee separates from Microsoft and the date when the former employee may begin an assignment as an External Staff performing services for Microsoft.

We have several outstanding questions about the new policy, but please also let me know if you have questions.

Thank you,

The difference between a- ("ay dash") and v- ("vee dash") workers is one of continuity. One worker at a Microsoft contracting agency who agreed to speak anonymously explained that a- contracts could last as long as 365 days, followed by a mandatory 100-day break. "I strongly suspect that this was the manifestation of Microsoft exploiting some form of loophole that would allow them to avoid some sort of labor violation or dispute," he said.

V- contracts, on the other hand, used to be "ongoing contracts, entered into by indirect employees usually referred to as vendors, contingent staff, or simply contractors. These are very common around Microsoft and they are contracts with no definite end date and no mandated 100-day break. I have known many v- contractors that have worked 3 or more years on one contract... I'm quite sure there are veterans of 10 years of continuous contracting out there."

Not any more.

Another vendor, who also spoke on condition of anonymity, said this move ultimately stems from a class-action lawsuit back in the early 2000s, which resulted in the a- and v- distinction.

But lately, a lot of a- work was being routed through the v- system, allowing managers to keep people on for longer without having to deal with the 100-day break. (Or the company having to pay full salary and benefits.) Microsoft, she said, is probably doing this to close a loophole.

"What they're doing is rolling the two programs into one program so there won't be any distinction," she said. "Now anyone who is not a full-time Microsoft employee will be required to take a break."

Yet another employee who agreed to speak anonymously said he thought this screw-tightening on Microsoft's part was justified. "As someone who likes Microsoft, I agree there is a lot of fat in the company," he said. But unlike the layoffs in 2009, which management telegraphed for months before they happened, these are coming as a surprise. "There is," he said, "no internal conversation preparing us for any of this."


Comments (42) RSS

Oldest First Unregistered On Registered On Add a comment
Microsoft, the be-all and end-all of IT, is now being eaten alive by technological piranhas.

The question is...what will be left?

Desktops, eaten by Android?

Gaming eaten by declining interest and casual apps?

Office eaten by Gmail?

Mobile eaten by LG and Samsung?

Hardware eaten by Apple?

Intelligent systems eaten by IBM's Watson?

Social media eaten by Facebook?

SQL Server and .NET business applications...well, here they have a market, but it will require streamlining, and growth, in that direction.
Posted by Supreme Ruler Of The Universe http://_ on July 18, 2014 at 5:56 PM · Report this
Dougsf 2
That's similar to what tech friends that work in tech as 1099's at the big Bay Area companies must do as well. I believe a lawsuit against Microsoft in the mid-90's was the genesis of these rules, but I won't pretend to understand the nuances that allowed so may Microsoft vendors to skirt this rule until now.
Posted by Dougsf on July 18, 2014 at 5:58 PM · Report this
Interesting. Microsoft is probably introducing this policy to confound their own managers given that they frequently jump through hoops to turn what should be A- positions into V- positions so they don't have to lose experienced workers for 3 months.

This is likely to very much screw up the business models for some companies that have been taking on more and more work at the Redmond campus in recent years.
Posted by Rhizome on July 18, 2014 at 6:00 PM · Report this
I predict this rule will be violated routinely, possibly even repealed before 18 months passes.
Posted by unpaid reader on July 18, 2014 at 6:19 PM · Report this
fletc3her 5
This is how Intel works in the Portland area. It prevents temporary employees from ever being considered direct employees. It's all about cutting benefits.
Posted by fletc3her on July 18, 2014 at 6:49 PM · Report this
Simply Me 6
I am glad to see this program go. As a former contractor I always felt abused by the system. While FTE's enjoyed basics like vacation, healthcare, and somewhat decent job stability, we were left feeling like others. We had desks, but didn't really move in. We never knew if we would be re-upped in 6 months and were never really fully brought into the conversation. As a consquence I never felt ownership of my work the way I do when I am fully employed. I also never felt loyal. Nor should I.

Nevertheless they put me in charge of work that was full time and needed a full time expert. More than 5 years later contractors are still doing what I did and I promise you that work will still be happening well after the layoffs. It was a mission critical job they never took seriously -- marketing and PR. That's why Apple is winning.
Posted by Simply Me on July 18, 2014 at 6:50 PM · Report this
I just finished an 18-month v- contract and it was a great experience. I got good insurance, but not vacation, but the salary was fantastic.
Posted by karinaq on July 18, 2014 at 7:00 PM · Report this
My understanding (as someone who was an a- almost 10 years ago) was that the result of the class action lawsuit brought by eternal temp force employees during the early MSFT boom was this 365 days on 100 days off rule. Folks who did similar work, reported to the same manager, etc. either became millionaires (if FTE) or did not (if perma-temps). Whether you think that is fair or not (perma-temps got paid more from what I understand) is beside the point. There was a payout and new rules in place including the 365 on 100 off rule and the "this guy is not your manager but you report to him" rule (your manager was someone from the agency who came by once a month and said "wazzup?") The issue is that these new rules created the following interesting situation:

Certain high-value a- workers were basically guaranteed a rehire after 100 days (for years and years). This meant that certain jobs would sit idle in their absence. They were for all intents and purposes, key, irreplaceable members of the teams they worked for. When that happens, MSFT should HIRE the person full time. But they don't (no open head count for that team etc...). Having your co-worker who is super important to the functioning of the team take 3 months off every 12 months is hella inefficient for the longer term, but is just long enough to kinda eke by or have someone babysit the project until day 101.

The interesting thing about this new 18 month on and then 6 months off is it changes the nature of that job-on-pause situation. I would wager that you CAN NOT wait 6 months for RoboJoe to come back. MSFT will need the expertise in-house all the time. It also means that lots of a- and v- folks will either get offered a FTE position or will go find other employment instead of taking a long break - because 6 months is just too long between work (but 3 months is doable).
Posted by ManDrone on July 18, 2014 at 7:04 PM · Report this
Simply Me 9
@7 in most european countries it is required by law that workers get a minimum of at least 3 weeks of vacation. Not giving vacation time is a violation of human rights.
Posted by Simply Me on July 18, 2014 at 7:05 PM · Report this
Simply Me 10
@8 I think you are right. I hope this change forces managers to fight for the people they need and they are empowered to offer full time employment. It will make Microsoft so much better in the long run.
Posted by Simply Me on July 18, 2014 at 7:16 PM · Report this
Hopefully this will reduce rent on the east side!
Posted by Oceanfrizz on July 18, 2014 at 7:27 PM · Report this
thatsnotright 12
So, are these furloghed employees allwed to collect unemployment insurance during "off" periods? If so it sounds to me as if Microsoft has been using tax money to keep from hiring people into full time positions while avoiding payinf employee benefits such as insurance and sick leave. Anyone have any information on this?
Posted by thatsnotright on July 18, 2014 at 7:38 PM · Report this
fletc3her 13
@10 I think you have this backward. Moving forward most employees at Microsoft, except the chosen few plucked from college job fairs, are going to be temporary employees on 18 month contracts employed by an outside vendor. The industry is moving toward this as a standard so that Intel, Microsoft, etc. are not responsible for employee benefits. It is not a good thing for the workers.
Posted by fletc3her on July 18, 2014 at 7:45 PM · Report this
Karlheinz Arschbomber 14
Microsoft has not produced an "I gotta have this, it's amazing" product since about 1994.


You suck.

And the rents here won't be too damn high.
Posted by Karlheinz Arschbomber on July 18, 2014 at 7:51 PM · Report this
MrBaker 15
I don't know if I understand this since I just having paid much attention to Microsoft.

Contractors are surprised that rules of the company they don't work for are changing.
Is that it?

Direct employees get a 60 day layoff notice when working for a company over a particular size and I'm pretty sure that would be Microsoft.
Posted by MrBaker on July 18, 2014 at 7:55 PM · Report this
@12, yes, indeed they do qualify for unemployment benefits during their mandatory breaks. But of course their vendor agency is responsible for those payments, not Microsoft. And it suuuucks for the employee to have to pay COBRA for 4 months after every year, which will now be 7 months or so (because it never kicks in right away, does it?).
Posted by lily on July 18, 2014 at 7:56 PM · Report this
@15, The "direct employees" are getting screwed too, because they depend on their contract employees (a-) and vendors (v-) to actually get the work done. This is a game-changer at MSFT, and contractors are working normal business-critical jobs just like the FTEs, but with the added bonus of a threat of random and immediate contract termination hanging over their heads.

But hey, if you haven't paid attention to this stuff before and don't think it's something people should be upset about, then what's the big deal.
Posted by lily on July 18, 2014 at 8:02 PM · Report this
delirian 19
18 on, 6 off? This is a rule that is designed to ensure that the most talented workers go find other jobs. It reminds me of the old "stack rating" system that they had that caused so much internal backbiting. I'm guessing the same geniuses behind that one are behind this change as well.
Posted by delirian on July 18, 2014 at 8:09 PM · Report this
undead ayn rand 21
Whoops, this is much worse than the 1300 FTEs. Vendors definitely make up a large percentage of the local workforce.
Posted by undead ayn rand on July 18, 2014 at 8:49 PM · Report this
undead ayn rand 22
@15: "Contractors are surprised that rules of the company they don't work for are changing.
Is that it?"

The labor market has always been fluid for contractors, but IIRC it's been consistent for the 18 years or so since the Permatemp lawsuit. This is a pretty significant change of policy going forward.
Posted by undead ayn rand on July 18, 2014 at 8:55 PM · Report this
Simply Me 23
@13 maybe you're right, but it isn't a winning strategy. The good ones are already gravetating to boutique and start up firms -- or even better starting their own company. I know it is a privledged position, but if I can help it I will never lend my life to an employer who doesn't treat me fairly. My talent and time is worth more than that. So is yours.
Posted by Simply Me on July 18, 2014 at 9:18 PM · Report this
SchmuckyTheCat 24
@22, 18 years?

The permatemp lawsuit was 1999, settled in 2006 (my daughter loved the "no expense is off the table" trip to Disneyland). Microsoft changed it's a-/v- rules a few times in between, because the IRS kept intervening and calling permatemps common-law employees, thus subject to employer taxes (the IRS was not about to sue for the employee benefits though). The recent change really only represents about eight years of stability.

@12, yes, unemployment benefits underwrite Microsoft's, and many companies reliant on permatemp employees, labor costs. Last time this state changed unemployment rules, they just ruled out a whole class of part time employees, thanks to corporate lobbying. No help for the workers.

In the late 1990s, Microsoft also backed state legislation exempting their permatemp workers, paid hourly, from overtime rules (time and a half). They succeeded but most contracts leave time and a half in.

You can bet few if any H1-B visa holders were laid off, and no in-pipeline applications were rescinded. A sudden influx of highly skilled workers into the regional (even national) job market should cause applications from many companies to be reviewed, but they won't.
Posted by SchmuckyTheCat on July 18, 2014 at 9:24 PM · Report this
Yes, it is an extremely privileged position, since many people -- even some possibly more talented and experienced than you -- are working at Starbucks. Just keep it to yourself so you don't make people feel worse than they already do.
Posted by sarah70 on July 18, 2014 at 10:08 PM · Report this
MrBaker 26
@17, I never said this, "and don't think it's something people should be upset about", did I?

I just don't pay too much attention to the hiring practices of most businesses. It is unfortunate that makes you imagine that I had written something else.
Posted by MrBaker on July 18, 2014 at 11:18 PM · Report this
MS workers need a union!
Posted by Upchuck on July 18, 2014 at 11:26 PM · Report this
@24: actually the suit was filed in 1992 and settled in 2001. Then the money sat in trust for several more years of legal haggling before they paid it out. MS started the break in service for agency temp workers in the late '90s. At first it was 30 days but they changed it to 100 days within a year or two. The rules have not changed much since, until now.
Posted by yuiop on July 19, 2014 at 12:35 AM · Report this
MS is too cheap to employ copy editors?
Posted by crankybiker on July 19, 2014 at 12:45 AM · Report this
Simply Me 30
Sorry to offend @25. You are right.
Posted by Simply Me on July 19, 2014 at 12:46 AM · Report this
So by my calculations, MS is forcing the taxpayers to subsidize every v- to the tune of $7,200 a year via unemployment benefits. What a deal. Can we start talking about basic income already and end this nonsense once and for all?
Posted by jeffinfremont on July 19, 2014 at 10:41 AM · Report this
@29, that would be affirmative, and it was Micro$oft who "pioneered" the removal of documentation with software/hardware products, so that you would be encouraged to purchase said documentation through their Micro$oft Press.

It should be noted, once again, that Micro$oft settled out of court some years back to the firm which held the legal right to Dr.Dos (the renamed CP/M, Gary Kildall's original creation, which Gates stole and called DOS, utilizing the skills of one Tim Hill). They paid the firm at least $1 billion, which effectively proves their case against MS.

RIP, Gary, you were a helluva guy!
Posted by sgt_doom on July 19, 2014 at 10:43 AM · Report this
undead ayn rand 34
@30: If it was so easy, most vendors would already do so.

Besides, working with internal tools for so long tends to give vendors a mess of skills on the resume useless outside of MSFT. Even if the technical ability is solid, it's going to get them filtered out when they start applying to non-MS stack startups.
Posted by undead ayn rand on July 19, 2014 at 11:33 AM · Report this
undead ayn rand 35
@33: Huh? Their contract covers Microsoft employment so the original poster is correct. They will be dropped and while they could be employed elsewhere, there are not tens of thousands of other vendor gigs to be immediately placed into, so they will continue on unemployment until they find another contract.
Posted by undead ayn rand on July 19, 2014 at 1:09 PM · Report this
raindrop 36
@34: Internal tools are tangential. Real abilities are demonstrated by core competencies in development, programming, management, writing etc. New hires should be able to adapt to new authoring and developing tools easily.
Posted by raindrop on July 19, 2014 at 1:18 PM · Report this
undead ayn rand 37
@36: Only a scant few percent of those vendors are SDEs, SDETs, and management. That's FTE work.
Posted by undead ayn rand on July 19, 2014 at 1:54 PM · Report this
raindrop 38
@37: I meant those competencies in a broad way, that any developer, tester, writer, or editor should have -- FTE or not. I should have clarified workload and project management, not people management.
Posted by raindrop on July 19, 2014 at 2:18 PM · Report this
undead ayn rand 39
That should be the case, but nobody in the real world gives a fuck about the technical competencies of running the Windows Test Tool framework and creating automation based around it if you can't write Selenium. Startups don't want "potential". They care about specific technical competencies and screen you out otherwise.
Posted by undead ayn rand on July 19, 2014 at 2:37 PM · Report this
raindrop 40
@39: Yeah, I think that is what I was saying. Oh well.
Posted by raindrop on July 19, 2014 at 3:08 PM · Report this
undead ayn rand 42
@39: Oh, okay, I guess!
Posted by undead ayn rand on July 19, 2014 at 10:20 PM · Report this
"This effects..." I'm stuck. I can't read the rest of it.
Posted by JonL on July 20, 2014 at 2:26 PM · Report this
@24 -- You're referring to Vizcaino v. Microsoft. The case was settled, leading to a consent decree that may have since expired. The consent decree was mainly over the terms of stock purchase, not tenure issues generally. The avoidance strategy of a further lawsuit varies from year to year--the current move seems to be more about controlling operating costs short term than any common-law employee issues.
Posted by cpkcpkcpk on July 20, 2014 at 4:04 PM · Report this
Microsoft is an Indian company. Just move it all to Bangalore and be done with it.
Posted by Arthur Zifferelli on July 20, 2014 at 9:39 PM · Report this
@25 - "Just feel lucky you're not working at Starbucks" is a great way to respond to someone bringing up legitimate labor issues in their field. Really, any and all talk about labor issues should stop before it starts, right? This is the US after all.

A good alternative for actual Starbucks employees is "Just feel lucky you have a job at all."
Posted by lololollal on July 21, 2014 at 7:44 AM · Report this

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