Depending on your time zone, you might have gotten the official notification from your immediate superior of your layoff, if you’re under Microsoft payroll and not currently selling Azure – the Microsoft’s cloud computing product. And if you’re outside of United States, your chance of getting retrenched is at 75%, as compared to only 25% for American staff.
Conference rooms were booked, and some employees were being scheduled for 15-minute meetings with their managers, according to several postings on the anonymous chat app Blind, the popular app at Microsoft where some 26,000 of the software giant’s employees use it. But not all who get a meeting schedule will be laid off as some would be transferred.
After the leaks, Microsoft has announced that between 3,000 and 4,000 jobswill be lost in its latest restructuring, involving primarily its sales and marketing organizations. Microsoft has 71,000 employees in the U.S. and 121,000 employees around the globe, meaning 50,000 employees abroad are significantly affected. At 75%, this would mean 3,000 jobs outside of the U.S.will be axed.
This also means only 1,000 Microsoft employees (1.4%) in America are affected, a relatively small figure. Microsoft said it couldn’t give a precise figure because in some countries, especially in Europe, negotiations are required under labour laws. Some of the employees will be transferred to other departments within the tech giant, a possible reason for the smaller than feared number of layoffs.
Microsoft said – “Microsoft is implementing changes to better serve our customers and partners. Today, we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated.Like all companies, we evaluate our business on a regular basis. This can result in increased investment in some places and, from time-to-time, re-deployment in others.”
Microsoft also claimed that its goal isn’t to cut costs and the move is instead a change in how Microsoft handles sales. The Redmond-based multinational technology company said its plan is to use employees who are more knowledgeable about specific verticals so they can sell bigger packages, suggesting that some salespeople are being given a chance to sell Azure instead.
Azure, the Microsoft’s cloud computing service, has been doing a roaring business. Microsoft Azure’s revenue nearly doubled in the company’s latest fiscal quarter, with 93% sales growth. In an internal email last week, Judson Althoff, a Microsoft executive vice president wrote what there was “an enormous US$4.5 trillion market opportunity” for Microsoft in the coming years.
That market opportunity is believed to be none other than cloud computing products. Microsoft is currently competing fiercely, specifically with Amazon, and other giant technology companies such as Google, IBM and Oracle, in the fast-growing business of delivering software as a cloud service instead of as traditional software loaded onto computers.
It is a public knowledge that Althoff has openly criticised the old sales approach adopted by previous Microsoft Chief Operating Officer Kevin Turner. As a Microsoft strategist, Althoff has accused Microsoft salespeople of selling Azure like offering customers fries – sell it and forget it – on top of a hamburger set. They didn’t know how to position Azure as a useful service.
There’s a new sheriff in town, and Althoff wants changes in the sales and marketing to “enable Microsoft to align the right resources for the right customer at the right time.” Salespeople who previously accustomed to the company’s on-demand processing power and data storage products will now have to adapt to such changes, and learn how to sell cloud-computing products.
Key areas of opportunity, Althoff said, included expanding its cloud offerings in data analysis and artificial intelligence, and helping companies in every industry to become digital businesses – using Microsoft tools. However, it’s not only sales force that is affected by the layoffs. Retrenchment also falls on groups that had provided support to sales staff – the pre-sales.
Others to be laid off work at Microsoft’s Redmond headquarters including Microsoft’s information-technology department, finance and the Corporate, External and Legal Affairs department. Gone are the days where Microsoft will recruit salespeople who would show up to renew contract, sing songs and have empty talks while indulging nice food at fancy restaurants.
If Althoff’s previous interview is an indicator, sales employees with expertise in “cloud solutions” is preferred, or a mix of technical and sales expertise (such as pre-sales consultants), to help customers make use of on-demand software. Microsoft has been trying to boost the technical expertise of its sales staff, while slowly cutting salespeople who can’t think strategically.
As the industry moves away from packaged software that once was the core of its business, Microsoft has been gradually shifting to a cloud-based model under the leadership of Satya Nadella, who succeeded Steve Ballmer as the company’s chief executive in 2014. It’s not hard to understand Microsoft’s new business direction, considering Nadella’s background in cloud computing.
As a 22-year veteran of Microsoft before his promotion, CEO Nadella helped develop the cloud infrastructures for Bing, Xbox, Microsoft Office and other software services. Microsoft said revenue from its “Intelligent Cloud” that includes Azure rose 11% from a year earlier to US$6.8 billion. And that’s US$6.8 billion of the US$23.6 billion in revenue the company reported in its last earnings.
– Finance Twitter