Echoing the CEO Satya Nadella’s words to develop “leaner business processes” in a public memo, Microsoft seems to have axed a little deeper, marking the firms’ biggest ever lay off of a whopping total of 18,000 employees or 14 percent of the workforce, in its 39-year history.
Nokia division, recently integrated with Microsoft following the acquisition for around $7.2 billion earlier this year, will reportedly bear the brunt of the axe cut, with more than 12,500 professionals or 40 percent of the employees, to lose their jobs by next year.
Microsoft, with the closure of Nokia deal, had the headcount rise by nearly 25 percent from 99,000 to 127,000 as of last month. The company pledged to cut £350.8 million ($600m) per year in costs within a period of 18 months after the closure of the Nokia deal.
In an email to employees, Nadella claimed the layoff to be driven by 2 factors – work simplification and the Nokia Devices and Services integration synergies, explaining that the reduction in workforce will simplify the way the company works to become even “more agile.”
Nadella added that the company is planning for “fewer layers of management,” including “flattening organizations,” to make the business processes and support models more “lean and efficient with greater trust between teams,” resulting in “more productive, impactful teams across Microsoft.” He stated that realigning the workforce is the first step to build the right organization for the ambitions and that within the next 6 months, 13,000 employees, who will lose their jobs, will be notified.
Microsoft hasn’t revealed much information about the lay off, but according to Reuters, the “first wave of layoffs would affect 1,351 jobs in the Seattle area.” Previous reports noted that around 1,000 employees in Finland will lose their jobs. 18,000 job cuts is a huge increase compared to the company’s previous biggest cull of 5,800 employees in 2009, during Steve Ballmer’s reigns.
Nadella promises that the process of lay off to be in the “most thoughtful and transparent way possible,” adding that the company is also creating new “roles in certain other strategic areas.” He added that Microsoft will offer “severance to all employees impacted” and help in job transition in many locations.
Over the next year, Microsoft expects pre-tax charges including severance pay ($750m to $800m) to be between $1.1 billion to $1.6 billion.
