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Microsoft deal axes up to 60 jobs

The company is laying off up to 60 contract employees after signing an agreement with H&R Block to partner on its tax software.

Microsoft is laying off up to 60 contract employees after cutting development of its tax software, CNET News.com has learned.

The software developer signed a three-year agreement today with H&R Block to gain traction in the Web-based tax preparation market.

Close to 110 people working on the project will be affected by the move.

The shift in strategy for Microsoft comes as tax deadlines approach and as competition for tax preparation services heats. Several services such as H&R Block and Intuit's Web TurboTax are well-known for offering comprehensive online filing services. For Microsoft, which has been developing its TaxSaver software for more than two years, it would take more money and resources to develop services on par with those already entrenched on the Web.

An internal Microsoft memo obtained by CNET News.com called the partnership strategy "the best route going forward for MSN and the Financial Products Group."

The project team was notified in a mandatory meeting yesterday at Microsoft, according to a TaxSaver contract employee. Temporary workers on the project were given two days' notice, and full-time employees will have six weeks to find work in another area at Microsoft.

"We were told yesterday that tomorrow's our last day," said Barbara Judd, a contract worker and business systems analyst in the TaxSaver group. "I was terribly surprised."

Because of Microsoft's new policy, which requires freelancers that have worked a year to take a mandatory 100 days off effective June 30, many of the contractors expected to leave their jobs this summer.

"With the exception of 10 people, who will stay on to pursue an interesting tax opportunity on the XML front and manage sustaining issues for TaxSaver 99, the employees on the TaxSaver project are now looking for new opportunities at Microsoft," the Microsoft memo said.

A Microsoft representative would not comment on the layoffs but said that the company is accepting applications for about 3,000 jobs.

Members of the Washington Alliance of Technology Workers, or WashTech, a Seattle-based group focused on workplace issues, include several TaxSaver contractors who believed that the project would lead to further work at the company.

"(Contract employees) were given the expectation by management that, once the product shipped, they would be offered full-time jobs," said Marcus Courtney, co-founder of WashTech, which seeks to highlight the disparity of treatment between full-time and temporary workers. "Instead, they were offered a pink slip."

Under terms of the deal with H&R Block, the companies will integrate MSN's financial products with H&R Block's tax preparation tools, TaxCut. MSN TaxSaver customers will be able to complete their 2000 taxes through the software and will be able to access their records next year through H&R Block's TaxCut on MSN.