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Are Nadella's Historic Layoffs Best for Microsoft?
Are Nadella's Historic Layoffs Best for Microsoft?
By Jennifer LeClaire / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus

The hammer is dropping at Microsoft. The software giant is laying off a record number of employees, including up to half of the recently-acquired Nokia staff. Microsoft earlier this week announced plans to cut as many as 18,000 jobs.

This is the largest cut since Microsoft laid off 5,800 workers in 2009 and will run through both factory and professional positions, including sales, marketing and engineering departments.

At the same time, Microsoft CEO Satya Nadella made it clear that Microsoft is also “adding roles in certain strategic areas.” Nadella was not specific about how many or what types of roles Microsoft plans to add.

Long Overdue

Industry watchers from various fields are sounding off about the layoffs. Some are applauding the move while others are speculating on how it will impact Redmond’s corporate culture.

Jonathan Hill, an associate dean of Pace University’s Seidenberg School of Computer Science and Information Systems in New York, told us though many technology “power users” have lost top of mind awareness for Microsoft, the company’s products including Skype, Xbox and, of course, Office are in consumers’ hands every day.

“Perhaps more critically, Microsoft’s backend cloud computing and coding tools including SQL Server, Visual Studio and Windows Azure run many of the apps that consumers and businesses depend on,” he said. “Nadella’s changes are part of an ambitious and long overdue revamp of what is clearly a healthy company with a strong foundation of core products and growing revenues.”

The Bottom Line?

Of course, employees are more than a little concerned. A blogger known as “Mini-Microsoft” said it’s a bit unknown how the cuts will affect Microsoft and the city of Redmond, but he’s concerned that there is now a level of stress and anxiety at Microsoft.

“First, the selfish stress about whether my job is affected. Then personal circle stress. Then partner collaboration stress,” the blogger wrote. “Then way out there general concerns about the company. And guess what: when folks are stressed and gossiping, they are not effectively -- er, excuse me, productively (?) -- implementing the latest strategy. Physiologically, they have increased cortisol and this time will turn into a fog.”

Meanwhile, Matt McIlwain, a managing director of Seattle-based venture-capital firm Madrona Venture Group, told the Seattle Times that Thursday’s layoffs were good for Microsoft and demonstrated that "Satya’s playing for long-term transformational change.”

“It shows he has a plan,” McIlwain said, where “there’s coherency between strategy, culture and organizational structure . . . and he has the clear authority to act on it.”

And Frank Artale, a managing partner with venture-capital firm Ignition Partners, told the Seattle Times the cuts won’t have much of an effect on the local tech and startup culture.

“The local startup culture doesn’t suffer or benefit from changes like this from Microsoft or any other large organization in the area,” he said. “What would affect the culture is, if Amazon or Microsoft suddenly decided they were going to raise salaries and open up 5,500 positions.”

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