Microsoft cuts staff, refocuses services group

Microsoft Corp. is realigning its Microsoft Consulting Services business, following the lead of other IT vendors and consultancies in seeking more strategic work in place of routine services and development tasks. As part of the shift, the group recently cut 161 positions in the U.S., an unusual move for a company that traditionally shuns layoffs.

“Rather than the initial deployment, the focus will now be on higher level end-to-end solutions,” spokesperson Stacy Drake said. Microsoft will rely on its partners for implementation services, she said.

As part of the realignment, Microsoft will be hiring to boost the Microsoft Consulting Services group’s expertise in the areas on which it will focus, Drake said. Decisions about what positions will be created are still in the works. The consulting group, which focuses on helping customers align technology decisions with strategic priorities, is part of a broader services organization that also includes a product support division.

Microsoft Consulting Services has around 1,500 employees, out of 55,000 company-wide. Laid-off workers will remain on Microsoft’s payroll for six weeks and be encouraged to apply for open positions elsewhere in the company, Drake said.

IBM Corp. spent US$3.5 billion last year on PwC Consulting to add more strategic expertise to its consulting organization, while Hewlett-Packard Co. cited building its services division as a key rational for its acquisition of Compaq Computer Corp.

Microsoft is “absolutely” committed to refocusing its services group through internal hiring and not through acquisition, Drake said.