Microsoft starts layoffs as company changes strategy

Microsoft (MSFT) has announced they are laying off thousands of employees, most cuts will fall on Microsoft’s sales force. The layoffs come as rumors spread that the company is reconfiguring its sales organization to focus on its cloud-computing products. The vast majority of the affected employees are located outside the United States.

“Today, we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated,” a Microsoft spokesperson told CNBC in a statement. “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.”

Their cloud business has increased over recent quarters, Azure sales have grown 93% last quarter. Microsoft says its goal isn’t to cut costs and the move is instead a change in how the Washington based company handles sales. It said its plan is to use employees who are more knowledgeable about specific verticals so they can sell bigger packages.

The new approach will primarily target enterprise and small and medium business clients, a move away from traditional focuses like government, oil and gas and pharma. The timing lines up with the end of the company’s fiscal year when it traditionally makes big changes to headcount. Under CEO Satya Nadella, Microsoft has been concentrating on its Azure cloud computing business in which companies can buy computing resources in a pay-as-you-go model similar to competing offerings by Amazon Web Services (AMZN) and Google (GOOG).

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They sent an email to employees on Monday saying it planned to make wide-ranging changes to its sales organization, GeekWire reported.  Microsoft employed 121,567 people worldwide with about 52,000 employees in its global sales, marketing, and worldwide business units.

This employee reduction should be a reassuring indication that Microsoft is moving rapidly to the cloud and taking its customers with it on that journey. That’s more an indication of Microsoft’s longer term health than it is of any market weakness. To that point, this reduction is very positive.