NEW YORK, July 17: Microsoft said Thursday it would slash 18,000 jobs from its global workforce over the next year, the majority from the integration of the Nokia unit acquired this year. A Microsoft statement said the move is part of “a restructuring plan to simplify its operations and align the recently acquired Nokia Devices and Services business with the company’s overall strategy.”
The cuts represent about 14 percent of Microsoft’s global payroll of some 127,000. The company will take a charge of between $1.1 billion and $1.6 billion for costs related to the layoffs. Of the total, some 12,500 professional and factory positions from Nokia “will be eliminated through synergies and strategic alignment,” Microsoft said.
Chief executive Satya Nadella said in an email to employees that the “difficult but necessary” cuts are part of a plan to bring a new strategic direction to the US tech giant. “The first step to building the right organization for our ambitions is to realign our workforce.
“It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas.” Nadella added that “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.”
Microsoft completed its takeover of Nokia’s phone unit in April in a move that strengthened its position in mobile devices. The cost was around $7.5 billion. The moves come with Nadella, who became CEO earlier this year, seeking to reinvigorate a company that had been the world’s largest but which has lagged in recent years as Google and Apple have taken leadership of the tech sector.
Nadella said the restructuring “will simplify the way we work to drive greater accountability, become more agile and move faster,” and would mean “fewer layers of management, both top down and sideways.” As part of the shift, Microsoft will make a new push on smartphones, where it has managed to win only a modest market share for its Windows Phone platform.
“We will be particularly focused on making the market for Windows Phone,” said an email to employees from Stephen Elop, the former Nokia chief who now heads the Microsoft Devices unit. “In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia,” he said, referring to the Nokia-branded device.
“We expect to make this shift immediately while continuing to sell and support existing Nokia X products,” he said.