Microsoft: Layoffs for Some, Visas for Others


The software giant that has pushed for more H-1B visas faces tough questions as it lays off 5,000

Even as the economy hemorrhages jobs, many employers continue to advocate for fewer restrictions on importing foreign workers to fill specialized jobs. They say that while there's growing slack in the job market, there are still shortages of people to act as farm hands, nurses, and software engineers.

Not surprisingly, foreign-worker programs are coming under fire in the face of the highest U.S. unemployment rate in 16 years—7.2% in December. One of the critics' biggest targets is the software giant Microsoft (MSFT).

A longtime advocate for more skilled immigration, Microsoft continues to ask Congress to lift caps on the H-1B visa program for highly skilled workers and offer more green cards to foreign-born talent. As recently as Jan. 5, the company posted a policy proposal on President Obama's transition Web site requesting that the government "remove caps that bar entry into the U.S. by high-skilled immigrants." Several weeks later, on a Jan. 22 earnings conference call, the company announced plans to eliminate 5,000 jobs in research and development, information technology, marketing, sales, finance, legal, and human resources over the next 18 months, as well as thousands of contract jobs.

Tech Layoffs Up 74% in 2008

"We're certainly in the midst of a once-in-a-lifetime set of economic conditions," said Microsoft Chief Executive Officer Steve Ballmer during the call, after the company announced weaker-than-expected quarterly earnings. "The economy is resetting to a lower level of business and consumer spending."

Of course, Microsoft isn't the only tech company cutting jobs. With demand for new technology declining sharply, the pace of job-cutting by firms in the sector rose 167% in the second half of 2008, according to Challenger, Gray & Christmas, a Chicago outsourcing firm. Employers in telecommunications, computers, and electronics announced 186,955 job cuts in 2008, 74% more than during the previous year.

So far, 2009 has already seen tens of thousands of cuts at tech companies including Texas Instruments (TI), IBM (IBM), Motorola (MOT), and AOL (TWX).

Gates Pushed Higher H-1B Caps

The deadline for companies to request petitions for new H-1B visas is Apr. 1. In recent years, the demand for those visas has far exceeded the government-capped supply. It's unclear how the recession will affect demand this year.

The H-1B program was started in 1990 to give employers a short-term fix for what they claimed was a shortage of highly skilled workers. In 2007 and again in 2008, Microsoft co-founder and then-Chairman Bill Gates argued in Congressional testimony that there was a severe shortage of U.S. science and engineering talent. He urged Congress to raise the cap on H-1B visas for highly skilled workers.

But Microsoft's recent layoffs—the first such broad-based cutback in the company's history—prompted some to ask how Microsoft can still need more visa workers. Senator Charles Grassley (R-Iowa), a leading critic of the H-1B program, sent a letter to Ballmer on Jan. 22 demanding that U.S. workers get priority so as to keep their jobs. The senator asked Ballmer for further details such as a description of jobs to be eliminated, details as to how many are held by H-1Bs or employees granted other kinds of work visas, and how many similar jobs held by foreign guest workers are being retained. WashTech, a tech-worker labor union, and the Programmers' Guild, an advocacy group for U.S. tech workers, are also calling for more answers from Microsoft.

Microsoft: Talent Shortages Persist

Microsoft spokeswoman Ginny Terzano says the company is working on a response to Grassley's letter. Terzano declined to say how many H-1B visa workers would be laid off, but says "a significant number of the affected employees are foreign citizens working in this country on a visa."

Terzano says that despite the worsening job market, Microsoft still has trouble filling such core positions as software development engineers, software architects, and program managers. Also, while the company will eliminate jobs in some business segments, it will continue to hire in emerging areas, including online services, search, and cloud computing.

Such explanations don't satisfy critics, who say employers are abusing the program to hire cheaper foreign workers who displace Americans, depressing U.S. wages and working conditions. Terzano says Microsoft is working with the U.S. Citizenship & Immigration Services on reforming the program to prevent it from being abused in this way, but critics want tough legislative reform rather than administrative adjustments.

"Microsoft is laying off 5,000 workers," says Kim Berry, president of the Programmers' Guild. "Are we to believe that none of them would be qualified to fill these openings?"

Skeptics Doubt Americans Lack Skills

Some laid-off workers say they'd be happy to take full-time jobs with the company. Chris Fox, 55, says he has worked in two staff positions with Microsoft and several times as a contractor since 1989. Fox, who lives in Woodinville, Wash., about 30 minutes from Seattle, says he began a contract job with Microsoft in mid-November 2008, working as a senior software engineer on a new feature for the Windows 7 operating system. Fox was employing his C++ programming skills and earning about $55 per hour. He says that while he thought the job would continue through the year, Microsoft told him on Jan. 6 that it would no longer need him.

"I'd gotten great reports on my work from my manager," says Fox. "[The decision] came out of nowhere."

Dan Cobb, senior vice-president of Yoh, a tech talent and outsourcing company, says he doubts that there are many job categories tech companies cannot fill in the U.S., especially considering the state of the job market.

"If cost is not an issue, you can ultimately find anybody you want," says Cobb. He suggests however that Microsoft's problem could be geographic. "It's very possible that [Microsoft has] sucked the market dry in Seattle and surrounding areas," says Cobb. "It could be easier to ask a third-party company to have a particular worker delivered rather than conduct a nationwide search and relocate someone."


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