• Seattle Post-Intelligencer, Tuesday, January 6, 2009 12:30 PM

Rumors in the blogosphere that Microsoft is preparing to lay off 17% of its workforce appear to have been quashed. The blogs Mini-Microsoft and Fudzilla reported that the large lay offs were to be announced prior to the company's fourth quarter earnings call on Jan. 22. Fudzilla later backtracked on its report, saying that a large chunk of the 17% would come out of Microsoft's pool of agency staff, or contractors. Mini-Microsoft, which initially reported a 10% layoff, went a step further in a follow-up report titled "No Layoffs at Microsoft."

Meanwhile, CNBC seemed to corroborate both reports, saying that while Microsoft "will embark on significant cost-cutting ... the cuts will largely be handled through attrition and the non-renewal of contract employees, rather than through a rumored, sweeping layoff." A Microsoft source told the news organization that the speculation was "grossly exaggerated" but that "any company not paying careful attention to headcount in a climate like this is nuts."

Contractors tell the Seattle P-I that more contract projects than usual are not being renewed and that budgets were being more strictly adhered to. Cutting back on contractors would be a similar move to what Google has done.

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