Microsoft Cuts 18,000 Jobs This Year With Nokia Hardest Hit
Microsoft has confirmed it will cut 18,000 jobs by the end of the year, with 12,500 coming from the Nokia division.
In a memo, the company's CEO Satya Nadella said: "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."
Nadella said that from the 18,000 total jobs cuts, about 12,500 - comprising both professional and factory workers - would come from Nokia.
"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 month," Nadella added.
The move had been widely predicted and it is no surprise that the former Nokia employees have been hardest hit, following the acquisition of the Finnish mobile phone business by Microsoft being completed earlier this year.
The 12,500 cuts in the Nokia Devices and Services team represents around half of the total workforce in that division. Overall, prior to the jobs cuts, Microsoft had a total payroll of 127,000 employees.
The 18,000 job cuts is the biggest in the software giant's history, and is more than triple the previous largest cull of 5,800 made back in 2009.
End of Android
Details of exactly where the cuts will be made will be revealed later Microsoft says, but Nadella did give some indication that the Android-based Nokia devices will soon be a thing of the past at the Redmond-based company:
"We plan to shift select Nokia X product designs to become Lumia products running Windows."
There had been a lot of talk in recent weeks of Microsoft releasing more smartphones than would run a modified version of Google's software but this indicates that any such plans have been quashed.
Microsoft has committed to making $600 million (£350m) in annual cost savings with a year-and-a-half of the Nokia acquisition being finalised.
Since taking over as only Microsoft's third ever CEO in February has looked to reposition Microsoft to put cloud and mobile at the centre of the company in a memo last week.
However with a major axe being swung through the former Nokia division and the removal of the Nokia X devices, many will question if Microsoft is fully committed to becoming a major smartphone manufacturer in the future.
Here is the full text of Nadella's memo to employees:
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.
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