Microsoft to chop 18,000 jobs

Microsoft will reduce its total headcount by up to 18,000, CEO Satya Nadella announced last week, with both job cuts and new positions contributing to the revised headcount.

Nadella announced the cuts late last week - a little over five months after he took the top job - in an email to all Microsoft employees.

“The first step to building the right organisation 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,” Nadella wrote.

According to the CEO, the vast majority of the employees to be cut will be notified within the next six months. He stressed that while the company is eliminating roles in some areas, it will add roles in “certain other strategic” areas.

Nadella seemed to try to deliver the blow softly, saying: “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.”

The job cuts will take two forms: those due to “work simplification” and those that occur at Nokia Devices and Services as a result of its integration into Microsoft.

Of the first form, Nadella said: “We will simplify the way we work to drive greater accountability, become more agile and move faster.”

This includes reducing the number of layers of management at the company, “both top down and sideways”, in order to accelerate information flow and decision-making. It will also entail “flattening organisations and increasing the span of control of people managers”.

Business processes and support models will be “more lean and efficient with greater trust between teams”, and the changes will result in more productive teams across the company, Nadella said. “These changes will affect both the Microsoft workforce and our vendor staff.”

Cuts at Nokia

About 12,500 of 18,000 cuts will come from “synergies and strategic alignment on Nokia Devices and Services”, Nadella said in the email. These Nokia cuts will come from both professional and factory workers.

Still speaking of the changes at Nokia, he added: “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.”

He also provided some specifics of the non-personnel changes at Nokia.

“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.”

The job cuts announced last week are perhaps the biggest changes to Microsoft since Nadella took the helm in February this year - but they are not likely to be his only big changes.

One week prior to the email detailing the 18,000 headcount target, the CEO sent an email titled ‘Starting FY15 - Bold Ambition & Our Core’ to all Microsoft employees.

“Nothing is off the table in how we think about shifting our culture to deliver on this core strategy. Organisations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned,” he wrote in the earlier email.

“Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving.”

In last week’s email, Nadella promised to share “further specifics on where we are focusing our innovation investments” on a public earnings call, scheduled for 22 July US time.