Last week, Microsoft’s chief executive hinted in a long company memo that big organizational changes were coming soon.
That time has arrived.
On Thursday (July 17) Microsoft plans to announce layoffs that will substantially exceed the largest in the company’s history, according to several people briefed on the decision who spoke only on the condition of anonymity. Previously, the largest layoffs were in 2009, when 5,800 or so people were affected.
Employees at the company’s campus in Redmond were already bracing for the news. Human resources managers were reserving conference rooms for most of Thursday, most likely a sign that they will be used to meet with laid-off employees, a person with knowledge of the plans said. Employees will have an opportunity to question Microsoft’s chief executive, Satya Nadella, about the cuts on Friday at a regular town hall meeting that was scheduled before the exact timing of the layoffs was known.
Frank Shaw, a company spokesman, declined to comment.
Large layoffs are a rarity at Microsoft. Its layoffs in 2009 came during the economic recession that followed the bursting of the housing bubble. Since then, Microsoft has experienced a few more rounds of staff reductions, but the number of employees let go were typically in the dozens or hundreds.
With 125,000 employees, even letting go thousands more than the 5,800 people it laid off in 2009 would represent a small portion of its workforce.
Many current and former employees say Microsoft has grown too large and complex to compete effectively against other, more nimble companies.
In his 3,100-word memo to all employees last week, Nadella said Microsoft would announce organizational changes in July to help it simplify and move faster. “We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes,” he wrote. “Culture change means we will do things differently.”
The deepest cuts are expected to come from the businesses the company bought from Nokia several months ago, a deal that added about 25,000 people to Microsoft’s payroll. Microsoft previously pledged to find about $600 million in annual cost savings after the acquisition was completed.
But the cuts will not be confined to its Nokia groups, according to the people briefed on the company’s decision. In his memo, Nadella made it clear he intended to pursue a much broader transformation of the company.