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Microsoft cuts consulting jobs

The company lays off 161 workers as part of a restructuring of its consulting business. The cut is among the larger ones in the company's 28-year history.

Microsoft cut 161 jobs this week as part of a restructuring of its consulting business.

On Monday, the software giant notified the workers, spread across the United States, that their positions were being eliminated. A representative said the workers will have six weeks to find a new job within Microsoft, which has roughly 2,000 open positions at the moment.

The move is a rare pullback for Microsoft, which has never had widespread layoffs. The company has from time to time cut small numbers of jobs as it shifts priorities, and this cut is among the larger ones in the company's 28-year history.

Spokeswoman Stacy Drake said Microsoft is trying to make its consulting unit less focused solely on its own technology and more focused on broader business-process issues.

"We need to move from not only being experts in Microsoft technology to providing consulting services at a higher level and developing industry-specific solutions," Drake said.

The job cuts come from the company's 1,500-worker consulting unit, which is part of a 2,500-worker services business.

Drake said Microsoft also plans to add an unspecified number of jobs in its consulting business over the next year as part of the strategy shift.

Microsoft's move comes amid a weak overall technology consulting market.

Hewlett-Packard recently said it was cutting an additional 5,800 jobs beyond already announced layoffs, blaming, in part, sluggishness in its consulting effort. The company said it would lay off an unspecified number of workers in its services staff.

Microsoft has avoided large-scale job cuts during the tech downturn, but its PC maker customers have not. In addition to HP, Dell Computer, IBM and Gateway have all slashed thousands of jobs over the past two years.

Paul DeGroot, an analyst at Directions on Microsoft, said Microsoft already had people focused on helping companies set up their computer architectures. The Microsoft Consulting Services (MCS) arm, where the layoffs occurred, is unlikely to become a choice for the broad-level business process consulting done by IBM Global Solutions and EDS.

"I don't think anyone should have any illusions," DeGroot said. "Microsoft's business is selling software. MCS' role is to help people recognize the value of Microsoft software and deploy it more effectively."

DeGroot said that the cuts probably have more to do with shifting priorities among Microsoft's customers. Companies that were once willing to commit to bold new projects and would bring in Microsoft consultants are now focused on making the most of their existing gear.

"There may be better ways for Microsoft to use these people than to have them waiting around for bleeding-edge assignments to come through," he said.