Contract workers who require access to Microsoft’s buildings or corporate network are subject to a rule that takes effect Jan. 1 and may cause many to be out of work.
New Year’s Day, a day off for many, has another meaning for some contract workers at Microsoft: It’s the day they’re out of a job. Exactly how many is unclear.
Microsoft last year said contract workers in the U.S. who required access to Microsoft buildings or corporate network would have to take a six-month break from that access after 18 months of work for the company.
That 18-month limit arrived Jan. 1 for the first group of contractors.
Because Microsoft uses the services of thousands of contractors in the Puget Sound region, many of whom need building access to do their jobs, some in the industry debated whether the date would bring a big layoff.
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Microsoft this week declined to specify how many contract workers it expected to be affected by the new limits. In August, Microsoft’s procurement chief said he expected “the significant majority” of contract workers not to be subject to the six-month break.
The new policy is designed to make Microsoft’s vendor practices line up with the rest of the industry and better protect confidential information, a company spokesman said this week. “We value the partnerships we have with our supplier companies and the external staff they employ and have worked closely with our suppliers since [the announcement] to plan for these policy changes,” the spokesman said.
Microsoft says the new break is also aimed at drawing a firmer line between work done by full-time employees and tasks more appropriate for contractors.
The new policy is a major shift for Microsoft, which has relied on contractors for decades. Some of the workers deal in tasks like food service or security, while others occupy critical roles including software coding, hardware design and customer service. Technology contractors in the Seattle area can make a career out of jobs aiding Microsoft’s wide range of business units.
A decade ago, Microsoft paid out $97 million to settle legal claims brought by thousands of temporary workers who had said they were misclassified full-time staff members entitled to more benefits.
The company subsequently instituted a mandatory 100-day break for temporary workers following a year of work for Microsoft. Vendors, a separate category in Microsoft’s procurement system, were exempt from any limit until Friday. The new six-month break applies to both categories of external staff.
Microsoft directly employs about 115,000 people worldwide and was using the services of about 81,000 full- and part-time contractors at one point in 2015, according to a person with access to the data. It’s unclear how many are in the U.S., and what portion will be subject to the building-access curtailment that takes effect this week.
Many contractors qualified for an exemption to the break, Microsoft employees and contractors say. Contract workers operating under an outsourcing agreement — which means they function as a distinct group with little day-to-day input from Microsoft managers — are exempt from the 18-month cap.
Some Seattle-area contracting firms spent the past year making changes to their workforce in an effort to qualify for that provision. At least one firm leased office space near Microsoft’s campus to house contractors that might soon be working remotely.
For some contractors, the looming January deadline was a reason to start looking for work outside the company. Recruiters say the number of Microsoft contractors seeking other jobs climbed during the last few months.
Crystal Moore, a 37-year-old technical writer, left her contracting job at Microsoft in September for a full-time position with SpaceX, the Elon Musk-led rocket builder. She wanted to avoid competing with a flood of contractors seeking jobs in December or January.
“I knew I was going to be laid off, and I didn’t know how many people I’d be in competition with,” Moore said.
Marlena Sessions, the chief executive of Workforce Development Council of Seattle-King County, a nonprofit group that helps connect job seekers and employers, said she hadn’t seen an uptick in traffic to the job-help centers the group supports. “But we’re preparing for it,” she said. Microsoft’s shift “has been on our radar for quite some time.”
In the event the new policy does send many in search of work, Sessions said, it’s a relatively good time for technology workers to be seeking a new job.
The Seattle metropolitan area’s unemployment rate stood at 4.2 percent in November, better than the mark that economists typically consider full employment. Competition to hire software developers is particularly fierce.
“Anybody with an engineering background is getting scooped up right away,” said a manager at a Seattle contracting firm.
Less well positioned are newly unemployed Microsoft contractors in less technical roles, such as program and project managers, as well as sales and marketing staff, recruiters and contractors say.
“There’s been a flood of those people on the market,” the contracting manager said. “They’re having a hard time finding work.”
That’s exacerbated by the time of year. Hiring in technology, as in many industries, slows to a crawl during winter’s holidays.
“They really couldn’t have picked a worse time to do this,” said a Microsoft contractor whose team was to be eliminated Friday.
Some Microsoft groups have cut the size of their contract staff during the past several months, in some cases hiring full-time employees to do more of the work, contract workers say. Other groups are relying on a new crop of contract workers who haven’t hit their 18-month limit.
“It’s bizarre,” said a longtime contractor whose engagement at Microsoft ended Thursday and hasn’t been able to find another job. “It’s going to cost them to get somebody to replace me and train the new person to do the same job that they already had somebody doing.”