Microsoft to axe 14pc of workforce, 18,000 jobs to go

17 Jul 2014

Satya Nadella, CEO of Microsoft

In the aftermath of its acquisition of Nokia’s Devices and Services business, Microsoft has begun a restructuring plan that will see 18,000 jobs cut, or 14pc of its global workforce.

About 12,500 professional and factory positions in the Nokia Devices and Services business are to be cut while a considerable number of Microsoft jobs at Puget Sound near Seattle are also to be axed.

Microsoft concluded its acquisition of the ailing Nokia device maker this year for US$7.1bn.

It is not yet clear if the restructuring plan is to affect any of Microsoft’s 1,900 workers in Ireland. Microsoft announced 100 new jobs for Dublin last year and 60pc of these roles have been filled.

Microsoft was late to attack the smartphone market opportunity in recent years, ceding vital ground to faster-moving Apple and Google.

Turning around an oil tanker

Five months into his role as CEO of Microsoft, Satya Nadella is intent on turning Microsoft into a cloud and mobile-first business.

“The first step to building the right organisation 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 in an email to employees.

Nadella said the company aims to simplify the way it works, drive greater accountability and become a faster and more agile entity.

“We are working to integrate the Nokia Devices and Services teams into Microsoft. We will realise 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,” Nadella said.

Microsoft expects the restructure to cost the software giant up to US$1.6bn to implement, including US$750m to US$800m for severance and up to US$800m for asset-related charges.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years