Microsoft to Layoff Contract Workers

A source tells us the Microsoft is currently evaluating their contract worker staff and is likely to follow Google's lead and layoff several thousand of them. However, the source could not confirm the timing of the layoffs nor whether the layoffs have actually began. Microsoft noted in its latest 10Q that operating income growth was offset by increased headcount related expenses, which increased 22% year-over-year due to a 14% increase in headcount during the past 12 months.

The company also noted on their FY1Q09 conference call that they are making adjustments to headcount growth. Microsoft currently has 91,000 employees and I am not able to confirm whether that number includes contract workers.

Could be that both Google and Microsoft will initially manage their operating expenses by cutting the contract workers first rather than full-time employees, at least for now. They will likely wait until there is more visibility into how 2009 shapes up before evaluating full-time staff levels.

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