Earlier this week, rumors circulated about possible job cuts at Microsoft. This morning, a second group consisting of 2,100 jobs was in fact cut. Two months ago, the company said that as part of the overall restructuring plan, about 18,000 positions total would be eliminated, which equates to 14%.
Multiple business units are affected by today’s job reductions, with some units being located in foreign countries. A spokesperson for Microsoft stated through email that the company will continue to work through the process in the most mindful manner possible. In addition, the company deeply respects the individuals affected and thanks them for their dedication and service. All of the employees laid off in this second round will be eligible for severance packages.
The first wave of layoffs occurred this past July, a time when approximately 13,000 employees were affected. At that time, the spokesperson said it remained unclear as to when the other 2,900 jobs would be cut and if they would all be eliminated at once or in separate occurrences. Once the Microsoft staff reduction is over, it will be largest in the company’s history.
For a while, people have assumed that most of the workers who were laid off in July held jobs at the Nokia’s devices and services business, something acquired by Microsoft in April for a whopping $7.2 billion. This acquisition was secured while Steve Ballmer was still CEO and less than two months after the appointment of the new CEO, Satya Nadella.
Pertaining to the job cuts, Nadella wrote a public memo back in July that the goal to work toward strategic alignment and collaborations on Nokia Devices and Services, would account for approximately 12,500 factory worker and professional jobs, or approximately 50% of employees associated with the acquisition.
To some industry analysts, the Nokia job cuts indicate that perhaps Nadella was struggling with accepting his predecessor’s acquisition while others feel there may be a plan sometime in the future for the Nokia business deal to dissolve all together.
Other experts in the industry have questioned the company’s decision to stretch out the process of layoffs over time since uncertainty regarding what groups will be let go next affects employee retention and morale. Another concern is that for every wave of layoffs, the public is given a reminder about job cut plans. Because of this, customers who are deeply invested in Microsoft technology may experience rekindling concern.
Microsoft is shifting from a primarily on-premises software provider to selling cloud-hosted services that get billed through annual subscriptions, which is a huge transformation. Therefore, the company cannot risk showing any type of financial vulnerability or unfocused strategy.