Microsoft is set to lay off as many as 15,000 members of its 90,000 strong workforce, according to reports from the US.
Between 10 and 17 per cent of the company's full-time and contracted employees are expected to be made redundant this month, with tech site Fudzilla claiming the axe is likely to fall on January 15 – a week before Microsoft reveals its second quarter earnings results.
Large staff cuts are expected in the Europe, Middle East and Africa region, while the MSN department is said to be struggling due to a decline in sales. Companies are also expected to cut back on licensing Office products such as Microsoft Word, affecting the company further in 2009.
A ten per cent reduction in headcount could save USD 1.2 billion (GBP 826 million), according to some analysts.
"The prevailing wisdom on Microsoft is that the company may pre-announce disappointing December results," said Brad Reback, analyst at Oppenheimer & Co, reports The Independent.
"Should such headcount reductions materialise, we would view them as a positive sign that management is interested in preserving the company's operating margin structure through the downturn."
It is unlikely that cuts would affect Microsoft's entertainment and devices division, which is responsible for the Xbox 360 business, as it has begun to maintain profitability.
Last month, rival Sony announced plans to cut back on its global workforce due to economic pressure, axing some 8000 jobs by 2010, although SCEE president David Reeves has stated that the games department in Europe is not planning any redundancies.