Microsoft cutting thousands of jobs, sets focus on cloud computing segment
Most of the job cuts will come from Microsoft's sales force outside the U.S., while the company begins a shift away from its traditional Office software licensing structure
REDMOND, Wash.—Microsoft is laying off thousands of employees in a shake-up aimed at selling more subscriptions to software applications that can be used on any internet-connected device.
Most of the people losing their jobs work in sales and are located outside the U.S. The Redmond, Wash., company confirmed that it began sending the layoff notices June 6, but declined to provide further specifics except that thousands of sales jobs will be cut.
“Like all companies, we evaluate our business on a regular basis,” Microsoft said in a statement. “This can result in increased investment in some places and, from time-to-time, re-deployment in others.”
Microsoft Corp. employs about 121,500 people worldwide. Nearly 71,600 of them work in the U.S., with the remainder elsewhere.
The job cuts are part of Microsoft’s shift away from its traditional approach of licensing its Office software and other programs for a one-time fee tied to a single computer. The company is now concentrating on selling recurring subscriptions for software accessible on multiple devices, a rapidly growing trend known as “cloud computing.”
That part of Microsoft’s operations has been playing an increasingly important role, especially among corporate and government customers, since Satya Nadella replaced Steve Ballmer as the company’s CEO in 2014.
Microsoft’s “commercial cloud” segment is on a pace to generate about $15 billion in annual revenue. More than 26 million consumers subscribe to Microsoft’s Office 365 service that includes its Word, Excel and other popular programs. That number has more than doubled in the past two years.
Meanwhile, revenue from licensing of Microsoft’s Windows operating system has been increasing by five per cent or less in the past three quarters.