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February 26, 2009 5:55 AM
Posted by Benjamin J. Romano
The thousands of contractors who work at Microsoft through third-party agencies are facing pay cuts beginning Monday, as Microsoft continues to look for ways to cut costs.
Microsoft and its contracting agencies agreed to a 10 percent cut in the bill rate, impacting all temporary worker assignments. Several contract employees have said the reduction is being passed on to them in the form of a pay cut. One person said some agencies are seeking to pass deeper pay cuts onto their workers. Several contractors contacted The Seattle Times, asking for anonymity for fear that speaking out would jeopardize their jobs.
The 10 percent cut is for existing contracts. New contracts will have a 15 percent reduction in the rate.
The cuts are not a complete surprise, as Microsoft had been trimming its contract work force even before it announced layoffs of 1,400 full-time employees Jan. 22 -- the first major job reduction in company history. At that time, the company also said it intended to cut spending on contractors by up to 15 percent.
Another contractor said the cuts impact so-called "a-dash" employees, also known as contingent staff. It's not immediately clear if "v-dash" employees, who are vendors, are facing similar cuts.
Notification of some contract employees began Tuesday. Microsoft does not disclose how many contractors it employs. These workers staff reception desks, test software, provide specialized consulting services and perform other functions that keep the company running through outside agencies. Sid Parakh, analyst at McAdams Wright Ragen, has estimated the figure to be around 40,000.
Contractors were dismayed that the contract agencies could unilaterally change their pay rate. Others were concerned that they had made choices about benefits, based on a negotiated contract rate, but which may not be affordable now after the pay cuts. Others also said they were grateful to at least still have a job.
More specifics on how Microsoft is trimming its contractor costs can be found in this internal e-mail to the contract agencies, obtained by TechFlash. Among other measures, the e-mail says some Microsoft business groups will seek to reduce or eliminate overtime and total hours for temporary workers.