Are you a Microsoft employee/contractor? Be afraid, very afraid!

Rumor has it (here and here) that Microsoft is preparing for a worldwide mass layoff sometime in January.

The software giant has about 91,000 workers around the world and many of them are contractors,  if Microsoft follows the typical pattern for corporate layoffs, it’s likely that the contractors will be hit first. The plan would be to layoff between 10% and 17% of the entire workforce in its worldwide army.  For Microsoft, a layoff of this size would not be a small cut: as many as 10,000 to 15,000 workers would get the pink slip.

Microsoft’s layoff numbers will make a sizeable addition to the Techcrunch layoff tracker, and that will send a good signal to Wall Street.  Since currently MSFT stock is in a free-fall along with other tech stocks, the company probably would want to make its cuts before the Q2 earning report is released on Jan 22.

Which MSFT division will be the hardest hit? We don’t know yet,  MSN could be one, since it is not exactly the shining star in the Microsoft constellation. But Microsoft Europe, Middle East, and Africa might not be spared either.

If the rumor becomes reality, then Microsoft will find itself in the same league as Google and Yahoo, both of whom had to layoff large numbers of employees in the past year.

If the worldwide economic mess continues into 2009, then we might even see the entire MSFT empire collapsing and vanishing from the face of the Earth. Then Linux will declare “game over!” at last!

Ok, I was joking in the last sentences. I hope you all will have a Happy New Year and best of luck to MSFT employees who will be axed if the rumor is true!