Microsoft announced Thursday its most massive layoffs in the company’s history, but a 3-percent staff cut in the Puget Sound is being hailed by Washington Technology Industry Association CEO Michael Schutzler as a positive for all involved.
The bulk of the 18,000 positions to be cut over the next year are tied to the recent acquisition of Nokia Devices and Services, and will include 12,500 cuts to professional and factory positions as part of Microsoft CEO Satya Nadella’s vision for future Windows smartphone development.
In an email to employees Thursday, Nadella states the first 13,000 staff reductions have already been initiated.Those cuts will be felt in Finland and Hungary, and most will be notified in the next six months.
Microsoft will also cut 1,350 positions in the Puget Sound region, representing a 3-percent reduction of its 43,000 local employees. Schutzler said Nadella is making a smart move, and following industry trends by consolidating its workforce to focus on growth and cutting out redundancy.
One of those shifts in methodology over the past decade has been consolidating software development and software testing, he said.
“It’s pretty clear that the message is software developers will be doing their own testing,” Schutzler said. “That would mean, if you’re a tester, you’re most likely to be on the cut list.”
Nadella also stated in his Thursday employee memo Microsoft’s plans include reducing “layers of management, both top down and sideways,” which includes increasing “the span of control” for those managers who will remain following the tech company’s restructuring.
“This is a significant move just to significantly grow the company,” Schutzler said. “That’s awesome for us, as a region.”
Microsoft estimates it will spend up to $1.6 billion in severance packages and other pre-tax charges, as a result of the restructuring, which Schutzler said will give Puget Sound employees time to find new employment.
He added he’s already been contacted by an ex-Microsoft executive now working for Amazon who is interested in hiring on laid-off Microsoft engineers. The WTIA CEO said there about 5,000 computer science positions currently unfilled in the state.
“If you’re a computer science engineer, you’re not having trouble finding jobs here,” Schutzler said. “… The net impact to the region ultimately is going to be positive economic development.”
Many mid-level and senior managers for Microsoft have historically gone on to run their own startup companies, and Schutzler said he expects several to be laid off this year will use their severances to invest in new ventures.
Schutzler said it’s important to remember Microsoft’s restructuring was prompted by Microsoft’s plans for future growth, and cutting out redundant positions doesn’t mean the company will not be adding positions necessary as part of its strategic goals.
“I think Microsoft will be hiring a lot more people than they’ve laid off over the next couple of years,” he said. “… It’s a courageous move by Satya Nadella, if you think about it. He’s showing he’s got his eye on the ball and he’s a courageous leader. It’s awesome.”
