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Microsoft is cutting thousands of jobs in a realignment of its sales force toward cloud services.
Just prior to the Independence Day holiday, a report in The Wall Street Journal stated that the Redmond, Wash., technology giant was slashing thousands of jobs in its sales organization in a bid to reinforce its cloud-first product strategy. It’s an approach that has been paying off handsomely for the company in recent years.
“Today, we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated,” confirmed a Microsoft spokesperson in email remarks sent to eWEEK. “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.”
In April, Microsoft, when reporting an earnings-per-share performance that beat expectations, said its commercial cloud services slate had a run rate of over $15 billion. (Microsoft is scheduled to report its fiscal year 2017 fourth-quarter earnings on July 20.)
Now, a clearer picture of the latest round of layoffs at Microsoft is emerging.
Approximately 3,000 positions, most from Microsoft’s sales group, are being eliminated, CNBC is reporting. That figure represents less than a tenth of Microsoft’s total sales force, and most of those layoffs (75 percent) will affect workers outside of the United States.
“Microsoft has stated for some time that their focus is ‘cloud-first/mobile-first,'” Ed Anderson, vice president and distinguished analyst at Gartner’s Cloud Services practice, told eWEEK in response to an email inquiry. “It appears that Microsoft is acting more boldly on this strategy now by realigning its sales force to focus on their cloud offerings. Microsoft hasn’t provided specific details around what this means, other than to say that this will help them ‘better serve customers and partners.’
“To Microsoft, ‘better serving customers and partners’ means helping them embrace new cloud technologies,” continued Anderson.
Drumming up cloud business is a safe bet nowadays as IT spending is increasingly shifting from traditional hardware and software vendors to the cloud. Earlier this year, Gartner forecast that the worldwide market for public cloud services will reach nearly $247 billion this year, an 18 percent jump from last year’s haul of $209 billion.
In 2019, the market is expected to approach a third of a trillion dollars ($332.7 billion) before settling in at $383 billion in 2020. The research firm expects IaaS (infrastructure as a service) to emerge as the fastest growing category—one of which Microsoft’s cloud also caters to—hitting $34.6 billion this year, a 37 percent gain.
In addition to sharpening its focus on cloud sales, Microsoft is also reportedly redoubling its efforts on the large enterprise and small and midsized business (SMBs) segments of the IT market.
Microsoft isn’t the only technology company that’s been trimming its workforce of late.
Cisco announced in May that it was laying off 1,100 workers in an extension of a restructuring plan that began with a 5,500-job reduction announced in the summer of 2016. Last month, after closing the book on Verizon’s acquisition of Yahoo, the companies embarked on a reduction of 2,100 jobs as part of a plan to merge Yahoo’s web properties with the telecommunications provider’s AOL unit.