Microsoft job cuts far worse than rumored, could reach 18,000

Microsoft logoEarlier this week, we reported on rumors that Microsoft would be undergoing the largest round of layoffs in the companys history. Sources were initially saying that 5,800 or more employees would be let go during the companys FY2015 (which started on July 1), but the full scope of the cuts was announced in an e-mail from CEO Satya Nadella this morning, and reality significantly eclipses rumor.

"We will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year," reads Nadellas e-mail. Microsofts total employee base right now is just over 127,000, so a loss of 18,000 jobs would be approximately 14 percent of all Microsoft employees worldwide.

Of course, the cuts wont be spread equally across divisions. As expected, the majority of the cuts will affect legacy Nokia employeesabout 12,500which according to Nadella will be include "both professional and factory workers." According to Re/codes analysis, this is about half of the Nokia Devices and Services unit.

Buried at the end of the e-mail is a mention that Microsoft will reverse course on its Android-powered Nokia X devices, transforming some of them into Lumia devices running Windows Phone. Re/codes Ina Fried notes that Microsoft has said it will not be producing any further Android-based devices, so even though the e-mails language is somewhat ambiguous, this likely signals the death of the Nokia X line.

The remaining 5,500 cuts are anticipated to affect a broad range of operating groups; Nadella has previously mentioned the global Xbox teams marketing department as a prime target.

Affected employees will be notified about their termination within the next six months; Nadella will elaborate further on the layoffs during Microsofts quarterly earnings call on July 22, which we'll be liveblogging.

The full text of Nadellas e-mail is below:

From: Satya Nadella

To: All Employees

Date: July 17, 2014, at 5:00 a.m. PDT

Subject: Starting to Evolve Our Organization and Culture

Last week in my email to you I synthesized our strategic direction as a productivity and platform company. Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life. Today Ill share more on how were moving forward. On July 22, during our public earnings call, Ill share further specifics on where we are focusing our innovation investments.

The first step to building the right organization for our ambitions is to realign our workforce. 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. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional 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. Its 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. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company.

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

First, we will simplify the way we work to drive greater accountability, become more agile and move faster. As part of modernizing our engineering processes the expectations we have from each of our disciplines will change. In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft. These changes will affect both the Microsoft workforce and our vendor staff. Each organization is starting at different points and moving at different paces.

Second, we are working to integrate the Nokia Devices and Services teams into Microsoft. We will realize the synergies to which we committed when we announced the acquisition last September. The first-party phone portfolio will align to Microsofts strategic direction. To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsofts digital work and digital life experiences. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.

Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question thats on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture.


Source: Ars Technica

Tags: Microsoft

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