On Thursday, July 7, Microsoft Inc. (NASDAQ:$MSFT) announced yet another round of layoffs. The reason this time, according to the long-time running tech company, was that it wanted to realign itself accordingly with its most promising businesses.
Although Microsoft has refused to confirm the specific number of employees that they will be cutting, it is estimated that about 3,000 employees could lose their jobs — mainly within Microsoft’s sales group, according to CNBC. Reports also suggest that the majority of layoffs will not be occurring within the 71,000 employees of U.S. Microsoft.
In regards to the most recent job cuts, Microsoft spokesperson informed The Street, “Microsoft is implementing changes to better serve our customers and partners. Today, we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated. Like all companies, we evaluate our business on a regular basis. This can result in increased investment and, from time-to-time, re-deployment in others.”
The employee cuts could be attributed to Microsoft’s plans to refocus itself on its cloud computing services. For the past few years, Microsoft has been giving more and more of its attention on cloud computing in order to shift away from the slow PC market and get back to its legacy as a software business. Although no specific revenue were provided by Microsoft for the sales of Azure, Microsoft’s most recent computing platform, the company did reveal in its most recent earnings report that revenues for Azure rose by 93%.
Before today’s announcement, Microsoft had sent a memo to its employees on how its sales business will be undergoing restructuring, according to GeekWire. It detailed how the business will now be separated into two categories: enterprise and small (commercial business), and medium and corporate customers (consumer business). As well, the enterprise unit will be focusing on six markets: manufacturing, financial services, retail, health, education, and government. The memo did not mention anything about employment cuts, which could have caused some surprise amongst Microsoft’s employees when the plans of layoffs were announced.
Still, investors, shareholders, and employees alike shouldn’t be too surprised at Microsoft’s announcement. Restructuring in the middle of the year has become common for the company ever since 2013 when former CEO Steve Ballmer called for a company-wide restructuring. Following its usual annual announcements of job cuts at the beginning of each fiscal year, today’s news of job cuts came just as the 2016 fiscal year ended on Friday, June 30, 2017. For the past three years, Microsoft has laid off employees every year — this year was not any different.
2014
On July 17, 2014, Microsoft announced that it will be laying off about 18,000 employees — the largest number of job cuts in the history of the tech company. The vast majority of job cuts were due to Microsoft’s acquisition of Nokia’s devices and service unit. Microsoft spent $7.2 billion for the acquisition — and to make up for the $7.6 billion write-down Microsoft had to undergo for the purchase, jobs were cut.
2015
Following the 2014 lay-offs, Microsoft announced yet another round of job cuts around a year later. 7% of its workforce, or 7,800 employees, were laid off. The cuts were mainly within the company’s phone hardware business — it had struggled despite acquiring Nokia in 2014.
Current CEO Satya Nadella addressed the reason of the layoffs, saying that Microsoft was shifting priorities. Instead of growing a phone business, Nadella said, Microsoft will now be focusing on growing and creating a successful Windows ecosystem — which will include the company’s first-party device family.
2016
Microsoft announced that they will be letting go of 2,850 employees on July 7, 2016. 900 of the employees were from the sales unit — marking the very beginning of Microsoft’s attempt to further integrate the company’s Sales, Marketing, and Service Group (SMSG) within the rest of the company’s businesses.
Following closely to the announcement of layoffs, long-time sales chief Kevin Turner left Microsoft that year.
Featured Image: depositphotos/wolterke