Microsoft Job Cuts Can’t Cool Seattle's Hunger for Code Writers

July 18 (Bloomberg) -- The largest job cuts in Microsoft Corp.'s history are a recruiting opportunity for Seattle-area rivals, who see them as a chance to snatch talent. Bloomberg's Britton Staniar reports. (Source: Bloomberg)

The largest job cuts in Microsoft Corp. (MSFT)’s history are a recruiting opportunity for Seattle-area rivals, who see them as a chance to snatch talent.

In a measure of the Redmond, Washington-based company’s lessening dominance of a regional software industry it all but created, technology executives say the cuts may only dent a frenzied job market driven by companies from Amazon.com Inc. to Zillow Inc. (Z) Some entice workers with perks such as free lunches, paid dry cleaning and, at one startup, a half-share of a sustainably raised hog for scouting a new software engineer.

“We all have effectively an infinite number of open positions for software developers, program managers,” said Spencer Rascoff, chief executive officer of Zillow. “If I somehow magically filled 100 positions we’d open another 100, and Amazon would too.”

Microsoft, which is cutting as many as 18,000 jobs worldwide, says the initial round will affect 1,351 in the Puget Sound region surrounding Seattle. While those who lost administrative work may not be as fortunate, software engineers can pick from more than 6,000 open positions in the Seattle area, according to the job listings site Indeed.com.

Founded by Seattle natives Bill Gates and Paul Allen in 1975, Microsoft put its operating system on most of the world’s desktop computers and helped the region diversify its national identify from airplanes, logging and fish. The software maker is the state’s second-biggest private employer after Boeing Co. (BA), with 43,031 Puget Sound jobs as of June.

Photographer: Mike Kane/Bloomberg

The Space Needle and buildings stand in the downtown skyline as the sun sets in Seattle, Washington. Close

The Space Needle and buildings stand in the downtown skyline as the sun sets in Seattle, Washington.

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Photographer: Mike Kane/Bloomberg

The Space Needle and buildings stand in the downtown skyline as the sun sets in Seattle, Washington.

Growth Drivers

As Microsoft stumbled in newer markets for smartphones and tablets, companies such as Amazon, which went public in 1997, and Zillow, a real estate website founded in 2005, have kept driving growth. Technology companies including Facebook Inc. (FB), Google Inc. (GOOGL) and Groupon Inc. (GRPN) have all expanded their regional offices, some employing hundreds of people.

“The Seattle area will absorb this very quickly,” said Steve Shivers, founder of Doxo, a Seattle startup backed by Amazon CEO Jeff Bezos. “Talent’s in high demand everywhere.”

One company, a food distribution startup called Farmstr, offers the bacon prize to people who help it find software engineers to hire. The culinary incentive is a way to avoid headhunter fees that can reach $25,000, said founder Janelle Maiocco.

Facebook’s Seattle office advertises 30 open positions and says benefits include $4,000 in “baby cash” for new parents, kitchens stocked with snacks and $80 a month for dry cleaning and laundry. Zillow says its starting salary for Seattle software developers is $100,000.

Photographer: Andrew Harrer/Bloomberg

Microsoft Corp. chief executive officer Satya Nadella said in his memo that while the company is eliminating some jobs, it will add others in certain strategic areas. Close

Microsoft Corp. chief executive officer Satya Nadella said in his memo that while the... Read More

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Photographer: Andrew Harrer/Bloomberg

Microsoft Corp. chief executive officer Satya Nadella said in his memo that while the company is eliminating some jobs, it will add others in certain strategic areas.

Groupon Opening

After opening a Seattle office in May 2012 with 30 people, Groupon now employs 195 and is looking to hire 75 more, said spokesman Bill Roberts. The company recently leased a third floor in its building near Pioneer Square.

“It’s a great talent market for us, and we like the opportunities we have to grow our presence here,” Roberts said.

The Seattle area’s unemployment rate was 4.8 percent in June, compared with 6.1 percent nationwide, according to the Bureau of Labor Statistics.

The concentration of technology workers has helped the region buck the nationwide stagnation in incomes, pushing up prices for homes, rent and even sushi.

Since 2008, annual pay for Seattle-area professionals in science, technology, engineering and mathematics has increased $14,930, or 18.8 percent. That’s the most of any metropolitan area with at least 100,000 workers in the fields, according to data compiled by Bloomberg.

Sushi Prices

By one measure of a professional’s cost of living -- the price of a basic sushi roll -- Seattle leapt from the sixth-most expensive U.S. city last year to No. 3 this year, trailing only New York and Los Angeles, according to data compiled by Bloomberg Rankings.

Seattle’s median home prices jumped almost one-third in two years, to $405,742 in May 2014 from $306,371 in May 2012, according to data provider RealtyTrac. Rents rose 7.2 percent to $1,139 in 2013, more than double the 3.2 percent increase nationwide, says Reis Inc. (REIS), a property researcher.

While Microsoft may be cutting jobs now, over time the measures promoted by CEO Satya Nadella are likely to make it more efficient, put it in faster-growing markets and safeguard its leadership position, said Matt McIlwain, managing director at Madrona Venture Group, which has invested in companies including Amazon and Redfin. He said he ran into several Microsoft executives at a conference this week.

“They’ve got more confidence in the company and themselves than I’ve seen in quite a while,” he said.

Nadella, only the third CEO in Microsoft’s history, said in his memo that while the company is eliminating some jobs, it will add others in certain strategic areas.

“I guarantee you Microsoft is going to keep hiring like crazy,” said Ed Lazowska, Bill & Melinda Gates Chair in the Paul G. Allen Center for Computer Science & Engineering at the University of Washington in Seattle. “They’re just going to shift their focus.”

To contact the reporter on this story: Peter Robison in Seattle at robison@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net Flynn McRoberts, Michael Hytha

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