It's no secret that times are tough in tech, but the industry's top dog has been consistently optimistic about its own situation. Microsoft has publicly stated that it will continue to grow and add thousands of new jobs, denying any plans more sinister than a prudent review of hiring plans. But indications from inside the wire are that things are more grim than have been publicly acknowledged.

With economic conditions looking dark even in the mid-term, however, the company may be gearing up (perhaps even inadvertently) for layoofs after all. Commentary on the blog of long-standing anonymous, internal critic Mini-Microsoft reveals a pattern of internal preparation for workforce reductions which, whatever the company ultimately decides to call them, amount to significant layoffs.

The stories, individually, are hardly conclusive... an increase in vague but suspiciously questioning meetings, individuals being cautioned on personal performance, immediate vendor cut-offs. Put them all together, and it seems that something is afoot in Redmond.

It's not impossible that these are being generated by panicked middle managers trying to stay ahead of the game (and perhaps attempting to protect their own positions in the bargain) and being amplified by concerned staff. As the post says, rumors. Neither is it any secret that Mini-Microsoft's position has consistently called for a downsized Microsoft, and that there may be some level of internal bias to the reports he or she is prepared to pass along on the blog. There is no reason, however, to think that the company is not taking prudent and realistic steps to "right-size" its workforce in the face of changing market conditions.

Mini has been a consistent voice calling for downsizing at Microsoft, albeit from a motivation to develop a leaner, more focused, more competetive company. While acknowledging this to be the case, Mini also says "I'm all for cutting back, but it should have been done long ago, responsibly, vs. forced upon us." The changing conditions compelling this action have been changing for some time; a more proactive, thoughtful approach to sizing the corporate workforce might have paid dividends had it been enacted a year or two ago. A reaction of this sort is bound to be negative, and hurts the company's chances to weather a number of other very real challenges it faces in the marketplace.

From my perspective, Microsoft is heading into this significant downturn with far fewer advantages than it has enjoyed historically. Those advantages are still tremendous: a significant cash position, continued domination of the desktop operating system and productivity software markets, a solid chunk of the server market, a strong gaming division, and a passel of very smart, very experienced people.

The company will have to deploy all those resources skillfully and without further mis-steps in order to weather the combination of the recession and increasing threats to its primary business model. I like the strategy apparently crafted by Ray Ozzie to transition Microsoft from a traditional software footing to a more services-oriented company. How the company executes on that strategy, and to what extent certain internal elements will strive to chain it to the older model, are extremely important. Following on the heels of the lackluster Vista release, the Yahoo acquisition debacle, and a number of high-profile failures in web and consumer services, the last thing the company needs is a haphazard approach to de-staffing (did I just make that word up? I like it!). Chaos and confusion resulting from across-the-board cuts or hiring freezes could torpedo even those things the company is doing right; and to end up in that position would only underline the point behind Mini's rhetorical question: "Whoa, how did we get here and who was leading us?"



Posted: Dec 31, 2008 6:21 am