3,000 Microsoft employees let go, Ballmer warns more cuts possible

Microsoft Corp. has laid off 3,000 workers, the second wave of a major reduction the company announced in January.

And in a memo to employees, CEO Steve Ballmer said more cuts are possible.

“As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure, including additional job eliminations,” Ballmer wrote in an e-mail confirmed by a Microsoft spokeswoman.

“As part of the plan we announced in January to reduce costs and increase efficiencies, today we are eliminating additional positions across several areas of the company,” said the spokeswoman.

“While job eliminations are always difficult, we are taking these necessary actions in response to the global economic downturn.”

Microsoft said in January that it would eliminate 5,000 positions, more than 5 per cent of the 96,000 full-time workers it had at the time. It laid off 1,400 of those employees at the time, most of them in the Seattle area where it is headquartered.

The 3,000 employees notified today are split between workers in the U.S. and elsewhere, said a spokeswoman. “With this announcement, we are mostly but not all done with the planned 5,000 job eliminations by June 2010,” Ballmer wrote.

In a 10-Q filing to the SEC on April 23, Microsoft said it has set aside $237 million for severance for 3,400 laid-off employees, “all of whom are expected to leave the Company by June 30, 2010.”

As mentioned in January, Microsoft still plans to hire 2,000 to 3,000 workers over the next 18 months.

The full text of Ballmer’s e-mail to employees follows:

From: Steve Ballmer
Sent: Tuesday, May 05, 2009
To: Microsoft – All Employees

Subject: Update: Realigning Resources and Reducing Costs
In January, in response to the global economic downturn, I announced our plan to adjust the company’s cost structure through spending reductions and job eliminations. Today, we are implementing the second phase of this plan.

This is difficult news to share. Because our success at Microsoft has always been the direct result of the talent, hard work, and commitment of our people, eliminating positions is hard.

Today’s action includes positions in the United States and in a number of countries around the world. In the U.S., affected employees will be notified directly by their managers today. In other countries, local leadership teams will provide more specific information about the impact to their organizations.

With this announcement, we are mostly but not all done with the planned 5,000 job eliminations by June 2010.

We are moving quickly to reach this target in response to consistent feedback from our people and business groups that it’s important to make decisions and reduce uncertainty for employees as quickly as possible, and so that organizations can concentrate their efforts and resources on strategic objectives.

As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure including additional job eliminations.

For those of you directly affected by today’s announcement, I want to thank you for your contribution to Microsoft and assure you that we will continue to provide support as we did during the previous job eliminations.

And for everyone across the company, I want to reemphasize how much I appreciate the way you have pulled together to help the company respond to this difficult economic environment. There’s no doubt that these are very challenging times. But together, we are making the right choices to ensure that we will continue to deliver great products and position ourselves for strong future growth and profitability.

Thank you for your continued hard work, commitment, and focus.

Steve

In January, when Microsoft’s first round of massive layoffs was announced, the news caught many Canadian industry insiders by surprise.

The report was closely followed by Intel’s announcement that is was closing four chip-making plants and letting go of between 5,000 and 6,000 workers worldwide.

The impact of those layoffs, Canadian analysts suggested, would be ongoing, serious and widespread.

“There’s definitely going to be some shock effect among many smaller organizations in Canada,” said Jennifer Perrier-Knox, senior research analyst for Info-Tech Research Group in London, Ont.

Another expert noted that Canadian IT companies are now bracing for a domino effect.

All this shows that market giants are not immune to the effects of the recession, said Carmi Levy, senior vice-president for strategic consulting at AR Communications Inc. in Toronto.

He noted that many Canadian companies that are struggling as well as those on top run the risk of being affected by the global economic downturn.

“When those chips start toppling, it’s hard to say which companies will remain standing,” Levy said.

Perrier-Knox noted that Canadian firms usually try to avoid firing staff – and usually have recourse to layoffs as a last resort. “Culturally, we tend to see cutting workforce as a last-ditch effort.”

When Canadian layoffs come, the Info-Tech analyst said, they will probably start with Canadian branches of U.S. companies or organizations with close ties to business south of the border.

With files from Nestor Arellano

Source: Computerworld.com

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