Microsoft to axe 5,000 workers worldwide

22 Jan 2009

Ireland got off lightly, with just 20 job cuts at Microsoft’s operation here, as the world’s biggest software player took the decision to cut 5,000 jobs after a slow second quarter.

For the second quarter Microsoft reported a 2pc increase in revenues of US$16.6bn over the previous quarter, and a net income of US$4.1bn, a decline of 11pc.

“While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach,” said Steve Ballmer, CEO at Microsoft.

“We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today,” Ballmer added.

The company said that as part of a cost cutting plan and to ward off the effects of further deteriorating economic conditions, the company will reduce all headcount-related expenses, vendors, contingent staff, capital spend and marketing.

As part of the plan, it will eliminate 5,000 jobs in R&D, marketing, sales, finance, legal, HR and IT over the next 18 months, starting with 1,400 today.

The cost-cutting initiatives could save the company US$1.5bn in operating costs.

“Economic activity and IT spend slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact,” said Chris Liddell, chief financial officer at Microsoft.

“We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half, relative to the previous year. In this environment, we will focus on outperforming our competitors and addressing our cost structure,” Liddell said.

Microsoft employs 1,200 people in Ireland, and a spokesperson described the impact of the cost reduction plan as “minor”, in so far as less than 20 positions are to be reduced.

“We can confirm that a small number of positions in Ireland are included in the immediate job elimination plans announced by the company today. While these positions represent a small proportion of our team in Ireland, our first priority today is to help and support those colleagues through this difficult transition.

“Microsoft is focused on the need to improve efficiency and rebalance resources against our priorities. We expect that the global economic environment will continue to be challenging and we will continue to evaluate our business to ensure that our investments are aligned to current and future revenue opportunities. We believe in the strength of the company, our ability to continue delivering value to customers and our approach to long-term growth.

“We remain committed to our business in Ireland where we have been operating since 1985. We have three divisions here: Microsoft EMEA Operations Centre (EOC), Microsoft European Development Centre (EDC) and Microsoft Sales, Marketing & Services Group (SMSG), which support Microsoft’s business across Ireland, Europe, Middle East and Africa – employing over 1,200 full-time staff – and encompassing a broad set of different functions including R&D, engineering, localisation, finance, billing, logistics, supply chain management as well as local sales and marketing,” the company said.

By John Kennedy


Caption: Steve Ballmer, CEO, Microsoft

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