Microsoft Bracing for Job Cuts

The software giant is reportedly getting ready to shed thousands of jobs on the heels of CEO Satya Nadella's lengthy memo to employees calling for a culture change.

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Job cuts loom at Microsoft, perhaps as soon as this week and just before the company announces its fiscal 2014 fourth-quarter earnings on July 22.

Company insiders revealed in a July 15 Bloomberg report that the Redmond, Wash.-based software maker may soon stage the biggest workforce reduction in its history. Microsoft cut its payroll by 5,800 jobs in successive rounds of layoffs during 2009, a current record for the company.

Those affected will include 1,000 Nokia workers in Finland, said a July 16 Reuters report, citing a Finnish newspaper. Microsoft plans to shutter a Nokia research and development facility in Oulu, Finland, that employs 500 people. The country is in the midst of a severe economic recession, noted the news organization.

Microsoft declined to comment on the matter.

According to Microsoft's latest headcount, the company employs more than 127,000 workers worldwide, a figure that includes 30,000 employees from its acquisition of Nokia's hardware division. Roughly half of that total (61,000 people) are employed in the United States. More than 43,000 are based in Microsoft's home state of Washington.

Layoffs may strike some developers as the company's leadership strives to streamline its software engineering practices. In a lengthy July 10 memo to employees, CEO Satya Nadella said that big changes are under way. Nadella took over as Microsoft's chief executive on Feb. 4, following Steve Ballmer's 14-year run as the head of the company.

"You can expect to have fewer processes but more focused and measurable outcomes," he stated, before hinting that the company's org chart may soon be pruned. "You will see fewer people get involved in decisions and more emphasis on accountability."

Nadella also signaled that the effects of the restructuring will be felt companywide. Every team across the massive organization "must find ways to simplify and move faster, more efficiently," he said. "We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes."

Further, Nadella revealed that he "asked each member of the Senior Leadership Team to evaluate opportunities to advance their innovation processes and simplify their operations and how they work." The company plans to share more details on the process throughout July.

The cuts will impact software testers and the marketing departments of multiple business units, including the global Xbox team, according to the Bloomberg report. Microsoft's Xbox division, however, will remain a part of the company, said Nadella in his memo, countering persistent rumblings that the video game and entertainment unit was being put on the auction block. Other drastic changes remain possibilities, however.

"Nothing is off the table" as Microsoft pursues a fundamental shift in culture, wrote Nadella in his memo. "Tired traditions will be questioned. Our priorities will be adjusted. ... Processes will be simplified," he said.

Pedro Hernandez

Pedro Hernandez

Pedro Hernandez is a contributor to eWEEK and the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the network of...