Drive towards the cloud leads Microsoft to layoff thousands

Posted Jul 4, 2017 by James Walker
Microsoft is poised to layoff thousands of employees as it embarks on a restructuring of its global sales team. According to several reports published in the past week, the layoffs are connected to Microsoft's intent to double down on cloud software.
The logo of Microsoft can be seen on a window of the  Microsoft Berlin  venue.
The logo of Microsoft can be seen on a window of the "Microsoft Berlin" venue.
John MacDougall, AFP/File
Both The Wall Street Journal and Bloomberg have reported that "thousands" will lose their jobs as a consequence of the new structure. The plan may be publicly announced as soon this week with affected employees notified in the coming days.
Bloomberg reported that employees will not be offered new jobs within Microsoft. The company is streamlining its business and creating a new sales team that will see many people have their role cut entirely. There are also expected to be "smaller personnel changes" across several other divisions of the company.
Other sources have disputed the claim that jobs are at stake. ZDNet reports that the reorganisation might not result in many layoffs being made. Microsoft may instead redistribute individuals across its workforce, assigning them to teams as required. The Wall Street Journal suggested redundancies could occur further down the line, after Microsoft has settled into the new structure.
The restructuring will see Microsoft realign its sales efforts around two core areas: large enterprises and small to medium businesses. The overall aim is to increase sales of Microsoft's cloud solutions like its Azure computing network. The company has been trying to get its salesforce to convert more purchases of these products as the technology industry as a whole moves to the cloud-first model.
The new sales focus won't have a major impact on Microsoft's operation or development. Instead, it's another step towards the new business model Microsoft has been pursuing under CEO Satya Nadella. Formerly dependent on the sale of licenses for products like Windows and Office, Microsoft now makes money by selling cloud service subscriptions to businesses. The restructuring around enterprise sales therefore makes sense in the wider context of Microsoft's aims.
The layoffs come at the end of Microsoft's fiscal year. The company often uses July to commence restructuring efforts and announce job cuts. In recent years, Microsoft has cut thousands of people from its global workforce, particularly those who used to work in its smartphone business.
Since acquiring and then subsequently writing down Nokia, over 10,000 people have been let go. The company made 2,850 cuts last year, including 900 from its sales group that will be impacted by this year's layoffs.