Thousands of employees will be laid off, with the cuts falling largely on Microsoft’s sales force. The vast majority of layoffs will hit employees located outside the United States, although some will also be in Redmond.
Microsoft on Thursday started the process of laying off thousands of employees, cuts that fall largely on the technology giant’s sales force.
The layoffs, anticipated widely since word of the plans leaked last week, come as Microsoft reconfigures its massive sales organization to focus on its cloud-computing products, and particularly sales to specific industries.
The cuts are expected to total thousands of workers, the company said, without giving specifics. The vast majority of the affected employees are located outside the United States.
Layoffs will also fall on some groups that had supported sales staff, including Microsoft’s information-technology department, finance and the Corporate, External and Legal Affairs department, according to a person briefed on the cuts. Some of those to be laid off work at Microsoft’s Redmond headquarters.
Reorganizations, often including layoffs, are an annual occurrence as Microsoft’s fiscal calendar flips to a new year at the beginning of July.
Microsoft started its new fiscal year on Monday with a 1,500-word memo that business sales chief Judson Althoff sent to Microsoft’s sales and marketing employees.
Layoffs weren’t mentioned, but the memo — also signed by global-sales subsidiary chief Jean-Philippe Courtois and chief marketing officer Chris Capossela — said sales employees will be required to “operate in new ways.”
The email detailed a range of changes to the organization of Microsoft’s sales groups aimed at simplifying the company’s sales teams. Before Thursday’s cuts, about 50,000 — or 40 percent — of Microsoft’s roughly 121,500 employees worked in sales.
That sales group was cobbled together during the decade in which Microsoft grew into a dominant player in business software by selling out-of-the-box software licenses, and was led by former longtime Chief Operating Officer Kevin Turner, who left the company last year.
As the company in recent years has pushed to sell more of its on-demand computing power, data storage and software services, Microsoft has tried to boost the technical expertise of its sales staff as it cut roles seen as redundant or no longer necessary. That has led to some hiring even as Microsoft shed jobs.
Althoff in an interview last year said that the company had tacked on over the course of a year about 1,000 sales employees with expertise in “cloud solutions,” or a mix of technical and sales expertise to help customers make use of on-demand software.
At the same time, Microsoft cut at least 900 sales jobs as part of the 2,850 layoffs the company targeted for the just-completed fiscal year.
The latest layoffs are “enough to shock the system,” said Ed Anderson, an analyst and former Microsoft employee who tracks the company with Gartner.
“The kind of sales force that they need is, instead of showing up to renew the contract, a sales force that is thinking more strategically” about how customers might use Microsoft tools, he said.
Most Read Business Stories
- Dispute arises among U.S. pilots on Boeing 737 MAX system linked to Lion Air crash
- Will Amazon's HQ2 sink Seattle's housing market?
- U.S. pilots flying 737 MAX weren't told about new automatic systems change linked to Lion Air crash
- FAA evaluates a potential design flaw on Boeing's 737 MAX after Lion Air crash
- Hotels see panic buttons as a #MeToo solution for workers. Seattle's guest ban? Not so fast.