A Note from the Trenches of Microsoft's Vendors and Permatemps

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Yesterday, a leaked memo from a Microsoft contract employee revealed that the company is not only cutting 14,000 full-time jobs, but is squeezing its tens of thousands of vendor employees by forcing them all to end their jobs in 18 months, then come back 6 months afterwards. That 18-month on, 6-month off rotation will be the new schedule for all of them.

What is a Microsoft contractor/vendor? The company has two kind of contracts (a- and v-, the former on a 365-day on, 100-day off rotation, the latter continuous) for work it wants done but ostensibly doesn't want to pay benefits for. (Though Microsoft has repeatedly said it developed this system for other reasons.) So it contracts labor agencies to supply them with workers, pays these agencies a lump sum, and lets them figure out how and what to pay the workers. The reason for the a- and v- distinction has to do with labor disputes from years ago. This new policy will fold the two streams into one.

One of these "external" Microsoft employees, who describes himself as a "permatemp," said many people in his situation work full time without benefits for years (at $17 to $22 per hour at the bottom rungs of the system) and have no idea what kind of cut the labor agencies are taking—but he suspects it's "hefty."

The situation, he said, is "just a bomb waiting to explode."

Another "external" Microsoft employee who works for one of those agencies wrote this morning to describe what it's like at his company. "I have never seen more beaten and broken down people in my entire working life," he said. "What's fascinating to me, in a very macabre way, is that many of my young co-workers don't know that there are actually jobs that provide good benefits. They have never experienced that so far and that says a great deal about what it's like to work in the US now."

The full text of his letter is below the jump.

A co-worker just emailed me the link to your article about Microsoft tightening the screws on vendors. I currently work as a v-dash in Redmond and have non-stop since February 2013. We saw some of the FTE layoffs yesterday in our group and that was a surprise. But we haven't heard a thing about the new vendor policy that's about to be implemented. This has been my first experience working in the tech industry and as you say the number of contractors employed by Microsoft far outnumber the full-time employees. I consider this type of employment to be almost "slave labor" in nature in that we are provided no health benefits, no paid sick leave, no paid vacation; pretty much no anything except an hourly wage. If we get sick, tough. You either go in to work sick or stay home and lose a day's pay. I have never seen more beaten and broken down people in my entire working life. All of us have worked virtually everyday since hired except for holidays (for which we are also not paid) and the level of exhaustion is palpable. Everyone I work with is seeking a new and better job but those are very hard to come by. The company we work for offers no raises and no advancement opportunities so we're basically stuck. Add to that the constant fear that you can be laid off at any moment and you have a very stressful work and living environment. How do you plan your life under these circumstances? We have very little to look forward to. Vacation? What's that? Can't afford to take the time off. What's fascinating to me, in a very macabre way, is that many of my young co-workers don't know that there are actually jobs that provide good benefits. They have never experienced that so far and that says a great deal about what it's like to work in the US now. People will say "why don't you get another job?" If only it were that easy. I'm in my mid-50s, MBA, 30+ years of international business experience and I can't find a decent job anywhere. I attribute this in part to very real ageism but I'll leave that for another day. The bottom line is that good-paying jobs are not plentiful any longer. The trend in business (especially in the tech world) is toward the use of contractors and paying them significantly less than they would a full-time employee. And they get away with it. It's truly a race to the bottom.

He says he and his co-worker make around $40,000 a year on the high end. "On the face of it, it sounds pretty good," he said. "The reality is that I, and my co-workers, struggle to make ends meet." Between rent, gas, and general living costs, they wind up living paycheck to paycheck. "For a younger person starting out in the tech field, this isn't so bad. But as I mentioned earlier, these kids have no idea what it's like to actually have benefits. They just assume this is the way it is and hope that they can get themselves a full-time gig with MSFT or any of the other big tech companies around. Which seems to be increasingly more difficult in light of the lay-offs that are happening."