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Microsoft Policy Changes Affecting U.S. Suppliers & External Staff: A letter from the CPO

Published August 13, 2015

To:  Microsoft Suppliers in the United States
From:  Mike Simms, Chief Procurement Officer, Microsoft Corporation

An update on changes to our policies affecting suppliers and external staff in the United States

We appreciate the work that you do and the contributions you and your employees make to Microsoft’s success.

We previously announced some changes to the way we work with suppliers and external staff in the United States. I wanted to provide an update on implementation and share some additional context on why we are making these changes.

We have two overarching goals. We want to ensure that everyone who works for, or on behalf of, Microsoft is aligned against our core priorities. Second, we want to work with suppliers who share our commitment to strong minimum standards for their employees who contribute to our work.

The policy changes

  • For work that is not managed under outsourced arrangements, Microsoft has implemented a policy that limits assignments to a maximum of 18 months for those who have access to our systems and/or work on Microsoft premises and that requires a six-month break before external staff can regain access to Microsoft’s buildings or corporate networks.  External staff who have had continuous access since the policy went into effect on July 1, 2014 will reach the 18-month tenure limit on January 1, 2016.  Obviously, people who began assignments later will hit the tenure limit later too.
  • If there is an ongoing business need, someone who has hit the 18-month limit can continue to perform services for Microsoft, but without corporate network or facilities access.
  • To ensure a smooth transition we are instituting a limited “extension” process that allows Microsoft business leaders to grant a six-month extension of building and network access for individual external staff assignments where there is a critical business need. This would allow those people to have building and network access for up to an additional six months before the required break.
  • Work that is managed under outsourced arrangements is not subject to the 18 month tenure limit. There is no restriction on length of assignment for these arrangements. The length of the assignment is driven by business need, as determined by Microsoft. We are in the process of assessing whether particular external staff engagements qualify as outsourced arrangements, and we believe the significant majority of work ultimately will fall in to this category.
  • In March of this year we also announced that we will require anyone doing work at a Microsoft supplier on behalf of Microsoft to be an employee of that supplier, and not an independent contractor.

How and why we are making these changes

  1. Alignment with core priorities:
    As our business changes we are making careful choices about how our work is done, including which work should be performed by Microsoft employees, which work should be outsourced, and which work is no longer needed. This work has led to some conversions of external staff to Microsoft employees, the re-scoping of some work, and a change to our model of engagement with suppliers.

    For work that can best be done by outside companies we have concluded that it is a best practice to utilize outsourced arrangements where we can.

    Under outsourced arrangements, Microsoft manages projects under a statement of work that is outcome- or deliverable-based and includes a well-defined end-to-end process, consistent key performance indicators and service level agreements. The supplier manages the day-to-day work of their employees. Beyond managing the work more effectively we think these arrangements also benefit the people doing the work. In our experience this creates role clarity, and improves the experience for external staff by strengthening the long-term relationship between them and their employer.

    We have been working over the past year with our suppliers to identify work that meets the criteria for an outsourced arrangement and to make the necessary changes.

    At the conclusion of this process, we expect that the significant majority of external staff will be engaged through outsourced arrangements, and will not therefore be subject to the break in building and network access after 18 months.

    Some external staff engagements will not meet the criteria for outsourced arrangements. We expect that, going forward, these engagements typically will involve seasonal or business-driven spikes in work that are shorter in duration. In these situations the break in building and network access after 18 months will apply. This approach is intended to ensure that Microsoft managers are making thoughtful choices about how and when to use external staff.

  2. Ensuring suppliers share our commitment to strong minimum employment standards:
    We want to work with suppliers who share our commitment to strong minimum standards for their people who work on our behalf. That’s why we are requiring our suppliers provide their employees who do our work at least 15 days of paid time off.

    That’s also why we require anyone doing work at a Microsoft supplier on behalf of Microsoft to be an employee of that supplier, and not an independent contractor. This is designed to ensure eligibility for important workplace protections such as minimum wage, overtime compensation, unemployment insurance and workers compensation.

Thank you for your continued partnership and your commitment to Microsoft’s success. Please share this letter with your employees who do work on our behalf.

Michael J. Simms
Chief Procurement Officer (CPO)
Microsoft Corporation