UPDATED 18:18 EDT / JULY 06 2017

INFRA

Microsoft confirms layoff rumors, CIO departure amid major reorganization

Cloud computing has provided a growth kicker even for some established information technology leaders, but the transition is proving painful for some employees, as many at Microsoft Corp. discovered anew today.

The software giant sent out an internal memo last week saying that it will be going through a major staff reorganization as it looks to boost sales of its cloud services, and this led to rumors that the tech giant might be looking at layoffs in the near future. On Thursday, a company spokesperson confirmed that the rumors are true, and Microsoft said that it is “taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated.”

In addition, on Friday Microsoft said its chief information officer, Jim DuBois, is leaving following a sabbatical. With Microsoft since 1993, DuBois was appointed CIO in 2013. Former longtime Microsoft executive Kurt DelBene is rejoining to fill that void with a new title, chief digital officer.

Microsoft is no stranger to mass layoffs. Last year, the company laid off close to 3,000 employees in one round of cuts, and in 2014 Microsoft laid off more than 18,000 people following its purchase of Nokia.

While Microsoft did not share an exact number for how many positions would be affected by the staff reorganization, The New York Times reported that the company may be looking to cut up to 4,000 sales and marketing positions, most of which are outside of the U.S. If true, this would represent a roughly 8 percent reduction to Microsoft’s entire sales and marketing division.

“Like all companies, we evaluate our business on a regular basis,” Microsoft’s spokesperson said. “This can result in increased investment in some places and, from time-to-time, re-deployment in others.”

In the internal memo sent out last week, Microsoft execs said that the effort to reorganize will allow the company to focus more heavily on “growth drivers,” which all seem to point to a renewed focus on boosting its Azure cloud platform. Azure has showed strong growth over the last few quarters, with a roughly 94 percent boost in its third fiscal quarter alone.

Despite its strong growth, however, Azure still has a long way to go to catch up with Amazon Web Services Inc., which is the current leader of the cloud market. And although AWS’s growth is slowing down some, in absolute terms it’s keeping itself firmly ahead of the competition.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, had told SiliconANGLE earlier this week that the move was no surprise. “This will enable Microsoft to better address cloud-native products, services and customers,” he said.

Microsoft’s move to focus on newer, faster-growing technology is part of a growing trend for older tech companies, which are having to adapt to rapid changes within the industry. For example, 106-year-old IBM Corp. has also been increasingly shifting its resources toward its “strategic imperatives,” a business segment that includes IBM’s rapidly growing cloud and cognitive services.

Photo: Microsoft

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