November 07, 2024
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King goes to bat for EnvisioNet Governor, Microsoft agree on layoff limits

AUGUSTA – An eleventh-hour personal appeal by Gov. Angus S. King to Microsoft officials Thursday may have spared EnvisioNet another round of massive layoffs.

The governor’s unexpected 3:30 a.m. flight to Seattle came on the heels of EnvisioNet announcing the layoffs of up to 700 of its 1,900 employees on May 17.

Microsoft accounts for more than half of the Brunswick-based firm’s business, with workers providing 24-hour telephone and e-mail customer service to computer users experiencing difficulties with their software or hardware.

Media reports last week pointed to a slowdown at Microsoft as the likely cause of the layoffs at EnvisioNet. Being linked to the layoffs may have angered Microsoft officials.

After hearing reports Wednesday that EnvisioNet’s relationship with Microsoft might be strained further and that more layoffs could be pending, King headed for Seattle.

Jim Desler, a Microsoft spokesman, confirmed King had met with company officials but declined to discuss specifics of the meeting. In a telephone interview, King said late Thursday afternoon that his mission had been successful.

Accompanied by John Donnelly, EnvisioNet’s chief executive officer, King said Microsoft officials agreed to make no further large-scale reductions in company contracts that essentially could cripple the Maine firm. He did not, however, preclude the possibility of some Microsoft reductions that still could trigger small layoffs at EnvisioNet later this year. But he said such reductions were “unlikely.”

“I was impressed that Microsoft was willing to listen,” he said. “It was successful because they recommitted to EnvisioNet at levels of service that will allow EnvisioNet to continue.”

Heather D. Blease, the company’s founder, initially refused to identify the “major client” that notified her last week that a “sudden and drastic reduction” in anticipated volume would result in a decline of customer services offered by EnvisioNet. But in a memo to employees, it subsequently was confirmed that Microsoft was the client whose decision had forced the layoff of as many as 700 employees.

EnvisioNet officials have maintained that company contracts with Dell Computers, another major client, remained secure. The firm plans to relocate its Maine corporate headquarters to Augusta from Brunswick while maintaining a satellite operation in Orono.

On Sunday, in a report published in the Kennebec Journal, Blease said “a major client” had miscalculated on computer and Internet business projections and that those decisions had triggered the unexpected mass layoffs at EnvisioNet.

“We ramped up our work to high-call volume, thinking it would continue,” Blease told reporters. “In April and May, the company came back and said, ‘Oops, we overprojected.'”

Although Blease did not identify Microsoft, it was commonly known in the industry that Microsoft’s contracts represented about 75 percent of EnvisioNet’s business. Microsoft officials reportedly were not impressed with Blease’s characterization of the corporate giant’s ability to gauge the marketplace and allegedly notified EnvisioNet that it planned to reduce its contractual agreements with the company further.

Microsoft apparently has a history of severing all ties with companies it feels has embarrassed it publicly, said Rob Enderle, an analyst with Giga Information Group in Santa Clara, Calif.

By naming Microsoft in an internal company memo that somehow was leaked to the media, EnvisioNet lost the software client’s trust and Microsoft wanted out of its relationship, he said.

“It’s hard for me to believe they would continue the contract,” Enderle said. “When Microsoft is embarrassed in this way, they lose faith in the vendor and the relationship with that vendor. They have a very hard rule about it. It’s not so much a written rule but a cultural rule.”

To Microsoft, it didn’t matter that EnvisioNet officials last week would not identify Microsoft publicly as the client forecasting a reduction in its customer support telephone calls, Enderle said.

“Somebody undoubtedly leaked it, and it’s difficult to identify the leakee from senior management or executives,” he said. “If someone from junior management leaked it and the company took a hard stance or fired that employee, that might help to get the relationship back. But once that trust is violated, it’s very hard to get that back.”

Catharine Hartnett, a spokeswoman for EnvisioNet, said Thursday she could not speculate on the implications of further reductions by Microsoft. But an employee who declined to be identified estimated that as many as 500 more positions could be eliminated should Microsoft choose to sever its association with EnvisioNet.

King said Thursday he did not believe Blease’s remarks had triggered any drastic reactions in the form of retaliatory contract reductions from Microsoft. He confirmed that Blease’s criticisms of her “major client” surfaced during the meeting, but insisted he was the one who broached the subject.

“I think they’re a company that’s sensitive to how they’re portrayed in the press,” King said. “I suspect that they didn’t like their name in the same paragraph with the word ‘layoffs’.”

Word of King’s mission to Microsoft leaked out early Thursday morning after aides to the governor told Rep. Edward R. Dugay, D-Cherryfield, that King would not be able to meet with sixth-grade pupils from Cherryfield Elementary School who were visiting the State House.

“I guess there was quite a problem with Microsoft, so the governor had to fly to Seattle to see if he could retain the rest of the jobs [at EnvisioNet],” said Dugay. “The kids were a bit disappointed, but we’ll get them back down here again when they’re in the seventh grade.”

Deborah Turcotte-Seavey of the NEWS staff contributed to this report.


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