Microsoft Inc. (MSFT) on Thursday confirmed a round of layoffs that's the latest move to re-align according to its most promising businesses.
The cuts could result in as many as 3,000 employees losing their jobs, with the restructuring largely being focused on Microsoft's sales group, according to CNBC. Microsoft declined to disclose how many employees are being let go. According to reports, a majority of the job cuts will occur outside the U.S. Microsoft employed 71,000 people in the U.S. and a total of 121,000 employees as of March 2017.
"Microsoft is implementing changes to better serve our customers and partners," a Microsoft spokesperson told The Street. "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."
Leading up to the announcement, reports surfaced that Microsoft would be laying off employees as part of a larger plan to refocus the group on selling cloud computing services. Over the past several years, Microsoft has turned its focus toward cloud computing as it tries to pivot away from the sluggish PC market and its legacy software business. Microsoft doesn't give specific revenue figures for its cloud computing platform, Azure, but said in its most recent earnings report that Azure revenues grew 93%.
The company sent a memo to employees this week detailing how its sales organization would be restructured, according to GeekWire, who obtained a copy of the memo. Microsoft didn't mention anything about the layoffs; instead, the memo describes how the customer model in its commercial and consumer businesses will be broken into two segments: enterprise and small, medium and corporate customers. The enterprise unit will now focus on six markets, including manufacturing, financial services, retail, health, education and government.
Representatives from Microsoft confirmed the contents of the memo, and said in a statement that the company notified employees of the restructuring earlier this week.
Mid-year re-structurings have become the standard at Microsoft ever since former CEO Steve Ballmer announced a company-wide restructuring in 2013 -- shortly before he departed from the company and current chief executive Satya Nadella took over in 2014. Microsoft typically announces job cuts at the beginning of its fiscal year; its 2016 fiscal year ended on Friday. The company has laid off employees every year for the past three years, each affecting different businesses.
Here's a rundown of Microsoft's previous rounds of layoffs:
Microsoft announced on July 17, 2014 that it would lay off up to 18,000 employees, marking the largest round of job cuts in the company's history. Nearly 13,000 of those employees were let go as a result of Microsoft's $7.2 billion acquisition of Nokia's (NOK) devices and services unit. The cuts came as Microsoft took a $7.6 billion write-down from the Nokia deal.
One year after it announced its largest-ever layoffs, Microsoft said it would cut another 7,800 jobs, or nearly 7% of its workforce. Most of the cuts affected its phone hardware business, an area that it had struggled to navigate despite the Nokia acquisition. Nadella said the layoffs were a part of Microsoft's ongoing shift in business priorities.
"We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family," Nadella told employees.
On July 7, 2016, Microsoft announced it would let go of 2,850 jobs, 900 of which were from its sales unit. The layoffs largely marked the beginning of Microsoft's efforts to "more deeply integrate" Microsoft's Sales, Marketing and Service Group (SMSG) with the rest of the company.
The job cuts resulted in the departure of long-time sales chief Kevin Turner.