Microsoft planning ‘thousands’ of job losses to focus on growing cloud services

Scott Guthrie, executive vice-president of Microsoft’s Cloud and Enterprise Group. Cloud is seen as integral to the company’s future. Picture: Microsoft.

Microsoft is poised to layoff thousands of employees worldwide in a move to reorganise its salesforce. A source with knowledge of the planned downsizing told TechCrunch that the firm would lay off  staff in a restructuring that could see the merger of its enterprise customer unit and one or more of its SME-focused divisions.

Over the weekend, the Puget Sound Business Journal, Bloomberg and The Seattle Times all reported “major” layoffs connected with a move to increase emphasis on cloud services within Microsoft’s sales teams worldwide. Bloomberg said the redundancies would be “some of the most significant in the sales force in years”.

“Microsoft is implementing changes to better serve our customers and partners,” a Microsoft spokeswoman told Reuters. The news agency said that the re-organisation will impact those under Microsoft chief marketing officer Chris Capossela, executive vice presidents Judson Althoff and Jean-Philippe Courtois, all of whom sent messages to their teams describing how the structure redesign will work. It added that the memos did not mention layoffs.

Althoff and Courtois took charge of its sales and marketing divisions following the exit of long-serving chief operating officer Kevin Turner in 2016. Althoff has been critical of previous sales approaches; in a 2016 interview with the Seattle Times, Althoff stated that the company’s cloud had become “a bit of an anchor tenant” for his sales force, signifying a change in Microsoft sales strategy.

The company’s cloud business, has been doing exceptionally well; Azure, which competes with Amazon Web Services, nearly doubled its revenue growth again in the last quarter. Growth in cloud revenue is seen as a key indicator of Microsoft’s progress as the company transitions away from legacy businesses.

The timing of the latest restructuring – reportedly being announced on Wednesday, 5 July – is in line with the company’s history of announcing employee reductions at the the end of its financial year. Last year, Microsoft said in two separate announcements, in May and July, that it would be cutting 4,700 by the end of its 2017 fiscal year.