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Microsoft Cutting Jobs in Shift to Cloud

Microsoft is chopping 3,000 heads, largely in sales, as part of a major reorganization shifting focus to the cloud, according to reports.

The job cuts comprise less than 10% of Microsoft's total sales force, and about 75% of the cuts will be outside the US, according to a report on CNBC. Reports of the reorganization and cuts began to surface last week. (See Microsoft Reorg Targets Cloud & AI Sales and Is Microsoft Planning Reorg Around Cloud?)

"Microsoft is implementing changes to better serve our customers and partners," the company said in a statement Thursday. "Today, we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated. Like all companies, we evaluate our business on a regular basis. This can result in increased investment in some places and, from time-to-time, re-deployment in others."

The cloud has been a growing part of Microsoft Corp. (Nasdaq: MSFT)'s business. Microsoft saw Azure revenue increase 93% year-over-year in its first quarter, ending March 31. That's actually a slowdown; Azure revenues have previously doubled year-over-year. Overall revenue for the quarter was $22.1 billion, compared with $20.5 billion in the year-ago quarter. (See Microsoft Wants Azure to Blur the Enterprise Edge.)

Amazon Web Services dominates the public cloud market, with 57% market share. But Microsoft is a fast-growing challenger; while Amazon.com Inc. (Nasdaq: AMZN)'s market share has been flat year-over-year, second-place Microsoft Azure grew from 20% share in 2016 to 34% this year. (See Cloud Growth Spawns Worries, Mary Meeker Reports.)

Microsoft employed 121,567 people as of March 31.

Microsoft's fiscal year ends June 30, and July is traditionally when it announces layoffs. Microsoft cut 2,850 people from its smartphone and sales team last July and cut 7,400 heads for the entirety of fiscal 2016, according to GeekWire.

Microsoft stock traded at $68.63, down slightly 0.68%, midday Thursday.

Intel also gave its workforce a trim earlier this week, cutting 100 jobs after canceling several Internet of Things projects earlier this year. (See Intel Cutting Over 100 IoT Jobs.)

— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Friend me on Facebook Editor, Enterprise Cloud News

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kq4ym 7/16/2017 | 12:06:52 PM
Re: Digital transformation with Archer I wonder how the decision about out of US firings came about as noted, " less than 10% of Microsoft's total sales force, and about 75% of the cuts will be outside the US." Could that be a PR move or a practical one as they expect to shift the business in that area of the world?
kq4ym 7/11/2017 | 12:07:25 PM
Re: Digital transformation with Archer At 10% of the aalesforce it does seem like a significant shot in the back for those folks. I wonder how the remaining sales people will take that? It would seem I'd feel like I have a target on my back and wonder if they'll be offered other positions in different departments or some training to join another team?
mhhfive 7/7/2017 | 7:51:12 PM
Re: Digital transformation with Archer I can't imagine what new functions of an ATM could be -- that a person shouldn't be able to figure it out him/herself without guidance. I'd actually be a bit creeped out if an ATM docent hovered over me while I tried to perform some ATM transactions. I'd also say that any ATM functions that require a human teacher actually require a UI overhaul.
Mitch Wagner 7/7/2017 | 1:56:29 PM
Re: Digital transformation with Archer It's possible that the ATM docents (a name I just made up that I love) are guiding people to new services from the ATM, beyond making deposits and getting cash. 
mhhfive 7/7/2017 | 11:14:55 AM
Re: Digital transformation with Archer RE: ATMs -- if you're not using an ATM yet, I doubt a person directing you to one will convince you. And you probably wouldn't have even brought your ATM card to the bank.
danielcawrey 7/6/2017 | 8:40:07 PM
Re: Digital transformation with Archer This is obviously some bad news for people. This transition Microsoft has made is not without consequences, but necssary to move forward. Perhaps with cloud being at the forefront, there's less of a need to upsell - hence the reduced demand for salespeople. 
Mitch Wagner 7/6/2017 | 6:10:16 PM
Re: Digital transformation with Archer I'm surprised people need to be sold on using ATMs after 40 years. I suspect that people still using tellers are never going to change their minds. 
mhhfive 7/6/2017 | 3:04:50 PM
Re: Digital transformation with Archer I've seen these "greeters" at banks... I don't think that's their "sole" job, but... it's interesting that it's a function at all.
Joe Stanganelli 7/6/2017 | 2:30:14 PM
Re: Digital transformation with Archer @Ariella: FWIW, banks now seem to employ someone whose sole job it is to stand near the teller line and ask people what they're there for to see if their instead best served by an ATM (or, occasionally, if it's somethiing more complex, a customer-service rep in an office).

Meanwhile, retailers have automated checkout -- but that too has created jobs and gigs. My brother just recently installed a bunch for a major retailer.

Of course, perhaps we are getting a bit too deep into the Parable of the Broken Window... (link)
Ariella 7/6/2017 | 2:24:03 PM
Re: Digital transformation with Archer @Joe on your second point, that is exactly what IBM is trying to do. From https://futurism.com/ibm-is-challenging-congresss-apocalyptic-perceptions-of-ai/

"IBM representatives are meeting with congress to challenge the lawmakers' apocalyptic perceptions about artificial intelligence (AI). IBM paints a different picture of the future in which AI will create jobs, drive progress, and help us develop as a species." 

Not that we're given to hyperbole, Heaven forbid. In truth, I don't buy it, especially when they try to say that ATMs actually increased jobs -- not from my point of view. I don't work at a bank myself, but I do notice fewer employees there, and in my local Chase, there are even two ATMs right next to the line for the tellers to remind people to try the machine and so use the humans less.
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