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Microsoft Makes Millions Renting Campus Space to Vendors
theodp writes "In a move that would do Bill Lumbergh (YouTube homage) proud, Microsoft has been pulling in about $25 million a year through its unusual practice of charging its vendors for occupying office space on its campus while working on Microsoft projects, according to the real estate firm that manages the program. And that's before a planned July 1st rate increase that Microsoft informed vendors of earlier this week, which will boost the 'chargeback' rate for its 'shadow workforce' from $450 per month ($5,400 per year) for every workstation to $510 per month (or $6,120 per year). So, is there a discount if you're moved downstairs into Storage B?"
Would it be news if Microsoft paid vendors $450 less per month than company B? Now, wouldn't it be even less news if vendors took this into account and adjusted their fees upwards by $450? This is just an accounting trick that probably has no real world impact on the vendors.
Business needs to see that needless filling of cubes just because is a waste of money of their own as well as their employees. Telecommuting is the responsible way of the future for environmental and quality of life reasons for the community at large.
Yahoo's failure was one of management, not of telecommuting itself.
I've worked in companies where every project was required to pay internal IT dept bills for services rendered, so what?
This is an accounting mechanism that forces projects to account for all costs Bourne by the corporation in support of the project. I suspect internal projects are also billed at an equal amount, but the bills remain internal.
It helps facilities lose the stigma of being a cost to the organization and instead it is funded by the internal groups that consume their resources.
At $450/540 a month, that's a pretty good rate for a piece of real estate, a desk, unmetered power and Internet access... Can I feta desk in MS office space for the same price? I currently rent a small 240 sq ft office for my work and it runs $525 for the space, plus utilities & ISP costs - $540/month all-in in an MS facility sounds good to me.
Ken
OK, so you have a worker occupying workspace, using power, air conditioning, network/wifi, phones, insurance liability...all the trappings of a typical office worker in any typical company anywhere. Except they're not working for Microsoft. So, to recoup these costs, Microsoft charges them rent. And this is a problem...why?
The only thing unusual here is that /. thought this was story-worthy. And $25M is a pittance compared to the company's bottom line so it's not like they're making out like bandits here.
In the end they will lay their freedom at our feet and say to us, Make us your slaves, but feed us. - Fyodor Dostoyevsky
And they'll end up abusing it.
The vendors are using their office space, their bathrooms, their electricity, etc. It's called rent.
As opposed to paid Microsoft shills and astroturfers posting their lies and modding down anyone who posts the truth about that evil empire?
* Carthago Delenda Est *
Ultimately, it's a cost of doing business. It works out to about $3 per hour, so employees wind up getting paid less unless you can recoup those costs from what you charge to MS. My guess is employees wind up getting paid less unless they have a very specific in high demand skill set.
I'm a consultant - I convert gibberish into cash-flow.
no, this is employees of all the companies that microsoft does business with
asus, dell, HP, symantec and dozens of others. they have employees at microsoft's offices to help enginees their products
Headline says Microsoft is "making millions". I think it would be more accurate to say Microsoft is "just about breaking even" on renting office space to vendors. As others have pointed out, ~$500/month for one worker is actually a pretty darn good deal.
I'm an engineer - and I hate it when my fellow techies reveal how incredibly clueless they are about mundane business matters like overhead and G&A expenses. It's embarrassing to the tech profession.
Don't know why it is such great news.
I mean, Microsoft is being smart and it seems like what they charge is a pittance and the vendors can probably use this as a tax deductible expense.
After all, vendors are in the business of making money with their products, in this case, Microsoft based products, so, Microsoft gives them a hell of a great deal, and I mean, it seems like a cheap price for them to work on their products, having access to Microsoft themselves. I think it's just smart.
It seems to me that Slashdot (or Dice Holdings) is bothered when Microsoft makes money, whether it be through their products or anything else. And the references to the movie Office Space are off-topic.
The contractors at my company are required to use a company provided laptop, which is rented out. Every month the contractors include that expense in the invoice. It's expected and standard practice.
It's not irrational to hate a news station that lies constantly. Fox News lies orders of magnitude more than any other station.
It's arrogance plain and simple and Microsoft is slowly and steadily becoming less relevant in computing today.
You're absolutely right. Microsoft is so totally irrelevant that last year they only had $68 Billion in revenue and only had the highest profits in the company's history. Yep, you nailed it. Microsoft is failing and failing fast.
One does not have to buy into either side of this particular binary reality. ...thankfully.
Actually, you're sort of on to something, but not necessarily the way you mean it.
As a result of various lawsuits which accused Microsoft (accurately, IMO) of using contractors ("a dash" employees, aka dash-trash, for the a- designation on their email addresses) as a de-facto permanent labor force without the benefits, contractors now have various limitations built into their contract, including, I believe, a 90 day mandatory period between contracts totally a year of employment. (It is worth noting that every time these lawsuits went through, the end result was in the contractors being treated worse.)
Of course, in terms of running projects, having your permatemps disappear is a major pain in the ass, so a lot of companies have gone over to using "vendors" or "v dash" employees - under a different set of legal rules, part of which involves that their parent company is providing a workspace for them - so they "rent" it from microsoft. From what I can tell it allows for a group of slightly better treated permatemps.
(Disclosure: When some of the early restructuring contracting relationships came down in the mid nineties... I took a perm position. But that was back in the day when you could make more money - well, salary - as a temp than a perm employee. And I can't complain about my stock option. I'm long gone from the company, but have a few vendor friends... and even fewer perm employees. Most folks long ago sought greener pastures.)
that is why labor laws need to change / end job based health insurance.
But based health insurance is just one benefit.
But in big places with lot's benefits it can also come down to for JOB X the boss think that all there works can just benefit B to get the tools needed for there job free but then what happens is the contractors can't get get or have to go under the table / buy it on there own.
under the law / IRS rules the degree of control can make if they say to much about what you can do / what tools you use you may be a employee and the company has to pay up there part of the tax obligations.
http://www.irs.gov/pub/irs-utl/emporind.pdf
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-(Self-Employed)-or-Employee%3F
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Behavioral-Control
Types of Instructions Given
An employee is generally subject to the business’s instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
When and where to do the work.
What tools or equipment to use.
What workers to hire or to assist with the work.
Where to purchase supplies and services.
What work must be performed by a specified individual.
What order or sequence to follow when performing the work.
As opposed to paid Microsoft shills and astroturfers posting their lies and modding down anyone who posts the truth about that evil empire?
I don't work for Microsoft (I'm with the networking evil empire) but I still know a bullshit story about a common practice when I see one.
Eagles may soar, but weasels don't get sucked into jet engines.
Well, if you have to pay rent you just include it in your bid.
If your competitor can do the job without needing to be on-site they might be able to outbid you. Usually the whole idea of this sort of thing is to try to get people to not be onsite.
As far as vendors being treated differently, I suspect that this is just the difference between contingent labor and what most would consider true contracting.
A contingent worker is just a body - they show up, get paid by the hour, and do whatever their assigned supervisor tells them to. They're just like an employee, but usually very limited in duration so that the company doesn't have to treat them as an employee. They're intended to help fill peaks, and they get let go when work isn't available.
The other arrangement is when a company creates a statement of work, gets bids, and then pay to get the job done. This would be analogous to hiring a plumber. You probably wouldn't charge a plumber rent, but you might not want to loan them your tools either. In this sort of arrangement the company usually wants the contractor to be as self-sufficient as possible. They don't care how they get the job done, how many people they hire, or how many hours they work. They're likely paying a flat rate to deliver a stated project in a stated duration. In this arrangement giving the contractor incentive to not park a million bodies in your office is useful. If they need to park a few they can just include your chargebacks in their price.
I can only agree about health care. Can we become a real country, please?
I think there is a lot to be said in terms of morale for standard benefits packages... but then that just incentivizes using non-employees.
talking about landlord landlords do they have to follow all the landlord tenant laws?
Yeah, if there were only a better site out there. REDDIT is not it, and anything like FB, Twitter, or Google anything is not going to suffice for a variety of reasons. Yes, I too bemoan the lower quality posting here, sometimes there are interesting nuggets. For myself, visits are sporadic at best, nonexistent at worst (from the site's perspective)
The cesspool just got a check and balance.
Someone is charging money for renting a space. How is that news? I sincerely hope microsoft starts raising the rent on developers, even to the point where they start having to switch operations over to Android development. Its about time microsoft started charging for the privilege of being on the worlds most monopolistic desktop. I wouldn't even be surprised if developers were 'taxed' a 'single M$ developer' tax for each project: they would have to pay the salary of one microsoft 'internal' developer, even though they won't directly get the benefits of having that developer. Their application might expose a critical flaw in the microsoft system, which will need to be fixed, and because their application exposed the flaw, they have to pay to get it (potentially) fixed.
No. Probably less than most stations. It's just that their lies are different from the lies you're used to.
They charge for power, phone drop, internet drop. But, it's to get approval for products that could easily be in a contract worth 100x that amount.