Microsoft quietly began a new round of layoffs this week, cutting small numbers of jobs throughout the company. While many news outlets are handling this story tentatively because the software giant has yet to officially confirm the cuts, I can now report that I was informed of these layoffs over the past month by various sources within the company and that they would happen sometime in July.
Microsoft had almost 89,000 employees at the end of June, almost half of which are in Redmond, Washington and the surrounding area. That's down considerably from the 92,000 employees Microsoft counted a year ago, but the difference reflects two factors. First, Microsoft laid off about 5,800 employees last year in a widely reported series of cuts. And second, the software giant hasn't actually stopped hiring during this time either: It hired over 2000 new employees in Q2 2010 alone.
Sources at Microsoft told me that this latest round of layoffs, though unexpected, would be far less severe than last year's cuts but designed to send a message to shareholders that the company was serious about reversing recent missteps, including a hugely botched mobile strategy that saw some senior leadership unceremoniously jettisoned from the software giant. Microsoft will report its quarterly and annual earnings on July 22 (its fiscal year ends each June 30). I had expected the layoff announcement to be timed to that report.
While I've not heard how many jobs are being cut, other reports suggest that it is in the "hundreds" and that involves employees from all over the company, including marketing and various product groups. If Microsoft performs a layoff that involves 500 or more employees from a single location, they must report the action to Washington State's Employment Security Department. They have not done so, suggesting that the number of layoffs in the Redmond area is below that threshold.
Though Microsoft has not issued a public statement about the cuts or responded to queries from various news organizations, an IDG publication in Australia called "ARN" reportedly got this quote from an (unnamed) Microsoft representative: "Microsoft believes its future business is firmly centered on the cloud and we are rebalancing the organization globally in order to create a number of new cloud specific roles across the business. We have identified roles that we will not be continuing with as part of our organizational structure as we create capacity for roles more aligned to this core cloud focus. It is part of a global change instituted by Microsoft world-wide."