Employees have reported that last Friday, Microsoft sent an internal letter to some employees indicating that the company was reevaluating its open headcount policy and that it would not be adding new staff. 

These employees have interpreted this as a statement by Microsoft that it is instituting a hiring freeze, which Microsoft now denies. Microsoft has more than 91,000 employees worldwide, with more than 54,000 in the U.S. Microsoft has seldom had layoffs or slowed down hiring during its 30 plus years in business.

The move is a sign that the financial crisis in the U.S. is taking a toll on the IT sector and follows a trip to Europe earlier last week by CEO Steve Ballmer where he announced plans to hire more engineers in Norway and other European locations. It is not known how the headcount announcement will affect those projects.

"It is not true that we have instituted a hiring freeze," said Lou Gellos, a Microsoft spokesman. "What is true is that we are evaluating hiring as we always do and we might make projections that are different than perhaps we had at the beginning of the year."

Gellos was unaware of the distribution of the internal company-wide memo about the hiring changes and insisted that the company plans to hire new employees. "This year we expect lots of growth and that we will hire lots of people," he said. "I think the nuance is in the fact that in light of the economy it's important that we do the prudent thing and evaluate projects that we're working on."

After the huge stock market crash in the U.S., analysts have downgraded the stock and earnings expectations for a number of IT vendors, including Apple, Intel and AT&T. Some analysts have indicated that the financial crisis is causing a credit crunch that will in turn slow IT spending by companies and consumers.