Microsoft Confirms It Will Axe 18,000 Jobs

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Satya Nadella ends Microsoft staff uncertainty with confirmation that 14 percent of the workforce will lose their jobs

Microsoft has confirmed, as expected, that it will axe up to 18,000 jobs, or 14 percent of its 127,100 strong workforce.

The announcement ends staff uncertainty of the big changes afoot at the software giant, ever since CEO Satya Nadella outlined his vision earlier this month, which hinted at job cuts and organisational changes. In that memo to Redmond staff, Nadella warned that “job responsibilities would evolve.”

Workforce Realignment

Nadella emailed Microsoft staff on Thursday, confirming the decision to axe a large portion of the workforce.

“The first step to building the right organisation for our ambitions is to realign our workforce,” stated Nadella. “With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year.”

satya nadella microsoft memo square ishNadella said that 12,500 jobs are expected to go during the “strategic alignment on Nokia Devices and Services”. The roles affected here will apparently include professional (i.e. engineers, sales and marketing) and factory workers.

“We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months,” said Nadella. “It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible.”

He promised staff would get a severance package and the company would offer “job transition help in many locations”. He also said people will start finding out today whether they still have a job.

“Later today your Senior Leadership Team member will share more on what to expect in your organisation,” said Nadella. “Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.”

Mobile-first, Cloud-first

Microsoft is somewhat remarkable in the tech industry, because it has only ever undertaken a company-wide headcount reduction once before. This was back in 2009 (just as the global recession was getting into its stride), when Microsoft trimmed 5,800 staff, or five percent of its then workforce. It also trimmed a couple of hundred marketing positions in 2012.

But since that time, the company’s headcount has swollen dramatically, not least because of its acquisition of Nokia’s handset business, which added a further 30,000 staff to Redmond’s payroll. Microsoft had promised when it signed the Nokia purchase that it would make $600 million (£350m) cost savings in the 18 months after the deal.

Nadella is looking to make Microsoft a much more “agile” company, able to respond to emerging technology trends much quicker.

“We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making,” said Nadella.

Microsoft also revealed it plans to scrap the forked-Android-based Nokia X range in order to focus on its mid-range Windows Phone handsets.

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