Microsoft Shutting Skype Office in London

By Pedro Hernandez  |  Posted 2016-09-19 Print this article Print
Microsoft Skype

Layoffs are hitting the London locale, a symbol of Skype's European roots, according to a report.

Microsoft is preparing to close Skype's offices in London, sparking another round of layoffs at the company.

According to a report in the Financial Times, the Redmond, Wash., technology company decided to "unify some engineering positions," a move that will affect the Skype and Yammer teams. An estimated 400 people work in Skype's London offices, the majority of which are expected to be affected by the closure.

Skype was founded in 2003 and became a mainstay of the UK tech scene after its internet-based, peer-to-peer communications platform, which enabled users to make free voice calls, surged in popularity worldwide. In 2014, Microsoft reported that Skype's user base averages 50 billion minutes of calls each month. At last count, the platform has more than 300 million active users.

Microsoft acquired Skype in 2011 for $8.5 billion. "Microsoft is committed to the ubiquity of the Skype experience—communication across every device and every platform will remain a primary focus," said former Skype CEO Tony Bates, in an Oct. 13, 2011, statement. "And we've only scratched the surface. We're at the starting line of integrating world-class talent, innovative technologies and products."

Now it appears that Microsoft is nearing the finish line in that integration process.

Redmond now dictates Skype's direction, not the division's European-based workers, an anonymous source told the news organization. Over the years, Microsoft managers have steadily displaced Skype managers over the years. Few, if any, original managers remain with the company.

Layoffs are nothing new to Microsoft's European divisions.

In May, the company announced plans to trim its workforce by 1,850 people, including 1,350 employees from Microsoft Mobile Oy in Finland, a former Nokia facility. Microsoft acquired Nokia's hardware and services businesses in 2014 for $7 billion, a move that ultimately failed to help Windows catch up in a smartphone market dominated by iOS and Android.

Two years ago, Microsoft's financials were dinged by a $7.5 billion write-down related to the Nokia deal. Last month, a filing with the U.S. Securities and Exchange Commission revealed that the company intends to eliminate another 2,850 jobs by June 2017, effectively wiping out the last traces of the ill-fated transaction.

Although Skype's London offices may be closing, Microsoft is showing no signs of abandoning the platform. Quite the opposite, actually.

Microsoft has nearly finished transitioning from Skype's peer-to-peer architecture to its Azure cloud computing platform, the company announced this summer. The change will help enhance Skype's existing functionality and enable newer features like real-time translation services, group mobile video calling and new Skype Bots, Gurdeep Pall, corporate vice president at Microsoft Skype and Skype for Business, said in a July 20 announcement.

The company is also reportedly using the Skype brand to launch a competitor to Slack, the rapidly growing team collaboration platform. Dubbed Skype Teams, the solution will offer Microsoft's take on Slack's signature messaging capabilities, along with Office 365 integrations and a Threaded Conversations feature that will allow users to reply directly to individual messages.


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