Microsoft announced today it will lay off a number of employees — reportedly 3,000 — mostly in field sales operations at non-US locations as it realigns its operations. While some see this as surprising and an indication of trouble in Redmond, I don’t. I actually see this as a positive development that indicates management is further aligning to new market realities.
When you move your company from a primarily on-prem enterprise provider of Office and Exchange/SharePoint applications sold on a per platform (server) basis, to a cloud-based solutions provider with Office 365, Dynamics 365, and Azure serviced from the cloud, the field sales skills and support models change dramatically. You no longer need lots of on-site support since most of the effort is done in the cloud and is highly automated. And the sales model is different as well, since more of the effort takes place remotely than through on-site handholding.
As a result, I expect Microsoft to place far more emphasis on telephone vs. live support, and on migration to the cloud support rather than on-site installations and field support techs. This is not the first realignment Microsoft is undertaking due to the shift to cloud, and it’s unlikely to be the last.
Will there be more reductions in the future? Very likely. Headcount reductions at Microsoft were once unheard off, but the company has made several job cuts in the recent past. Employees dealing with on-prem solutions will continue to be shifted to the cloud (if they can be; otherwise more people will be let go). Field support jobs will scale back over time, as will development functions focused on the on-prem applications. And field realignment will continue, too, based on the shift to cloud-based solutions. Of course, not all the on-prem solutions will go away soon. Indeed, I expect many on-prem server solutions will stay in service for at least 5-10 years, so Microsoft will retain some number of employees to continue their current efforts. But that number will slowly erode over time.
No one wants to see deserving employees lose their jobs. But this employee reduction should be a reassuring indication that Microsoft is moving rapidly to the cloud and taking its customers with it on that journey. That’s more an indication of Microsoft’s longer term health than it is of any market weakness. To that point, this reduction is very positive.
Jack Gold is the founder and principal analyst at J.Gold Associates, an IT analyst firm based in Northborough, MA., providing research and analysis of the many aspects of business and consumer computing, and emerging technologies. Follow him on Twitter @jckgld or LinkedIn at https://www.linkedin.com/in/jckgld.