Microsoft hiring plans to face "adjustment" as tech spending slows

Microsoft confirmed Friday it's re-evaluating its current hiring plans and "will make some adjustments as appropriate."

Those adjustments are likely to be downward, given Chief Executive Steve Ballmer's recent comments about Microsoft being affected by the economic slowdown.

Although the company still intends to keep growing, any reductions are unsettling for a region reeling from the fire sale of Washington Mutual, the sale of Safeco, a Boeing strike and a sputtering housing market.

Microsoft has helped insulate the Puget Sound region from previous downturns and its work force has become a cornerstone of the regional economy.

Yet it was inevitable the company's dramatic expansion in recent years would taper off as consumers and companies cut back their spending on computers and software.

Speaking in Oslo, Norway, on Tuesday, Ballmer said Microsoft will be affected by reduced spending on technology, especially in the financial industry.

"We have a lot of business with the corporate sector as well as with the consumer sector, and whatever happens economically will certainly effect itself on Microsoft," he said, according to Reuters. "I think one has to anticipate that no company is immune to these issues."

Friday, several employees notified The Seattle Times they were told hiring was frozen in their department.

Spokesman Lou Gellos denied there's a hiring freeze. Then he e-mailed a prepared statement saying Microsoft will continue to grow and add jobs but confirming it's scrutinizing hiring plans.

The statement said:

"Microsoft will continue to grow and add thousands of new jobs this year, but given the current economic environment we are taking the prudent step of reviewing our hiring plans and will make some adjustments as appropriate. We are optimistic about our prospects for growth and will continue hiring the talent we need to ensure our ongoing success."

Whether or not there's a freeze, companies that take prudent steps, review hiring plans and make adjustments during a downturn tend to hire fewer people.

The state's regional labor economist for the area, Desiree Phair, said a Microsoft hiring freeze or slowdown may not be critical, especially if it mostly affects international and college recruiting.

"My first gut reaction would be as long as Microsoft doesn't start laying off people — and I don't picture them doing that anytime soon — we'll be OK," she said.

However, if the company were to halt its current expansion plans locally, "there could be ripple effects."

Ballmer's comments and the hiring review come as Microsoft approaches its next earnings report Oct. 23.

The company is expected to update investors on its growth forecast; if it's lowered because of worsening economic conditions, investors will expect the company to reduce its spending.

Historically, Microsoft has resisted Wall Street's calls to cut costs.

As recently as July, Chief Financial Officer Chris Liddell said the company will continue investing in new ventures that may take 10 years to develop and become profitable.

Most of Microsoft's expenses are in employee compensation. As of June 30, the company had 91,259 employees globally, including 39,311 in the state.

Microsoft has been on a tear lately, hiring 1,000 people a month globally, building new online businesses and undertaking a major expansion of its Redmond campus.

It's also been leasing extensive space in Bellevue and downtown Seattle.

Gellos didn't provide specifics on hiring projections and how they're likely to change.

"We're hiring lots of people and we will this year," he said.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com