Microsoft To Cut Workforce By 18,000 This Year, ‘Moving Now’ To Cut First 13,000

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Microsoft has announced major layoffs today as predicted, following a company email published by CEO Satya Nadella last week that signalled changes on the way. In a note published by the company from Nadella today, the CEO outlines how the changes will happen, with a total of 18,000 employees getting the axe over the course of the next year, with 12,500 of those coming out of the streamlining of Microsoft’s acquired Nokia assets.

Nadella says that 13,000 positions are already being actively downsized in the first wave, with a “vast majority” of those to be affected receiving notice over the next six months. More information will come from senior leaders to their teams later today, Nadella says in the note.

Nokia looks poised to take the big hit in this round of layoffs – Microsoft brought on around 25,000 of the Finnish company’s employees when it acquired the company’s devices and services division. “[W]ork toward synergies and strategic alignment on Nokia Devices and Services is expected to account for 12,500 jobs,” says Nadella in the note, which could indicate that as many as half of the Nokia people are on their way out, though it’s likely that some existing Microsoft positions will be reduced to make room for incoming Nokia talent, too.

By comparison, Google laid off around 6,000 employees from Motorola as it worked to incorporate that company’s hardware team with its own organization before selling the unit to Lenovo late last year.

The cuts will include “fewer layers of management” and a flatter organization, according to Nadella’s note today, and they will also include rolling Nokia’s device’s teams into MS, which includes axing the current Nokia X Android-based designs in favor of building low-cost Lumia hardware running Windows Phone.

Employees affected will receive severance, as well as assistance with transitioning to new jobs in many locations. Nadella will also be hosting an internal Q&A tomorrow, which will definitely be an event to watch for those concerned with the big changes coming at Microsoft.

From: Satya Nadella

To: All Employees

Date: July 17, 2014 at 5:00 a.m. PT

Subject: Starting to Evolve Our Organization and Culture

Last week in my email to you I synthesized our strategic direction as a productivity and platform company. Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life. Today I’ll share more on how we’re moving forward. On July 22, during our public earnings call, I’ll share further specifics on where we are focusing our innovation investments.

The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months. It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company.

Later today your Senior Leadership Team member will share more on what to expect in your organization. Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.

First, we will simplify the way we work to drive greater accountability, become more agile and move faster. As part of modernizing our engineering processes the expectations we have from each of our disciplines will change. In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft. These changes will affect both the Microsoft workforce and our vendor staff. Each organization is starting at different points and moving at different paces.

Second, we are working to integrate the Nokia Devices and Services teams into Microsoft. We will realize the synergies to which we committed when we announced the acquisition last September. The first-party phone portfolio will align to Microsoft’s strategic direction. To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.

Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture.

Satya

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