Microsoft to cut workforce by 18,000


Current Microsoft CEO Satya Nadella has a reputation as someone who cuts middle management.
Current Microsoft CEO Satya Nadella has a reputation as someone who cuts middle management.

Microsoft is going through some major turbulence. Today it has announced major layoffs, beginning with 13,000 positions to go immediately, with a total of 18,000 expecting to find themselves out of a job sometime during 2014.

The vast majority of these sackings involve the company’s Nokia division. Microsoft acquired Nokia’s Devices and Services unit back in September 2013 for $7.2 billion. Along with taking ownership of the Finnish firm’s entire smartphone lineup — giving it complete control over both hardware and software– the acquisition saw 25,000 Nokia employees join the Microsoft ranks.

The current Microsoft layoffs means that up to half of the Nokia people will probably leave the company, although it will also likely signal the end for some previous Microsoft employees to allow for incoming Nokia talent.

According to Microsoft CEO Satya Nadella, the upshot of the axings will be “fewer layers of management” and a flatter (arguably more Apple-like) organisation structure, that will ditch current Nokia X Android-based handsets, in favour of lower-end Lumia hardware running Windows Phone.

Microsoft’s headcount has expanded rapidly over the past decade, from 57,000 in 2004, to more than 127,000 today. This downsizing is presumably an attempt to cut costs after the company’s period of speedy growth.

Nadella’s note to Microsoft employees is reproduced below:

From: Satya Nadella

To: All Employees

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

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 I’ll share more on how we’re moving forward. On July 22, during our public earnings call, I’ll 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. 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. 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 Microsoft’s strategic direction. To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s 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 that’s on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture.


Source: TechCrunch

  • popeyoni

    That whole Nokia merger keeps stinking.

    • Grunt_at_the_Point

      Why? because Microsoft is cutting positions. It makes sense positions would be cut. Do the research on other mergers and you will find the same thing happen in most instances.

      • CelestialTerrestrial

        Not really. Microsoft bought Nokia because they didn’t make their own smartphones, but Microsoft can’t sell enough smartphones, so that’s probably a big part of the layoff.

        The other thing that Microsoft has done poorly in is the Surface RT, so that’s the other part that’s probably leaving.

        When there is a merger, yes, there are usually some duplicate positions that are removed, but it’s also removing the baggage that they didn’t want.

        I think in this case, Microsoft simply doesn’t need all of the Nokia employees because they aren’t selling very many Smartphones.

    • 2oh1

      Replace Nokia with Zune and do the time warp as the wheels on the bus go ’round and ’round.

  • Duncan Hill

    He really comes across a a pretentious sh*t.

    • CelestialTerrestrial

      Well, he does run Microsoft, so what do you expect? he’s just rallying the troups right before a layoff. CEOs do this all the time. It’s called damage control right before the fallout. Typical Corporate BS.

      I think Microsoft is a deeply troubled position with mobile devices.

  • CapnVan

    Any time you read “synergy” or “strategic alignment,” you should know you’re in for a whole lot of manure.

    • Duncan Hill

      Indeed. His last letter that went out was similarly full of vacuous management-speak garbage. I had to read Jobs’ trashing of Flash letter a couple of times to rinse by brain with something corporate but readable.

  • brianm76

    18,000 losing jobs while he and his buddies still pocket millions.

  • Arnold Ziffel

    Satya’s recent 3,000+ word manifesto was code for “see ya, suckers!”

  • William Donelson

    Too late. Ballmer’s already had his private parts working on MS for years. How Ballmer completely wrecked Microsoft:

  • Ester Rosenblatt

    seriously? does no one else see what’s happening here? it’s HP all over again.
    1. Hire idiot ceo
    2. buy mobile device company with some good stuff
    3. close and drop all mobile device sections.
    4. give away all intellectual property purchased from mobile device company
    5. turn original company (HP, Microsoft, etc.) into a joke by making really stupid decisions

    • Arnold Ziffel

      Yep. You’re right, Ester.

    • Adrayven

      Wow.. had not drawn parallel to WebOS.. but thats basically what happened.. sad really.

  • 2oh1

    Did Microsoft intentionally seek a CEO who looks like a Bond villain, or was that just a perfect coincidence?