Report: Microsoft Reorganization Could Lead To 3,000 Layoffs

Microsoft is planning to lay off up to 3,000 employees as part of a reorganization to better focus on hot emerging technologies and specific industries, with a large majority of the job cuts to come from outside the U.S., according to a report Thursday.

CNBC reported that 75 percent of the Microsoft layoffs will be for positions based overseas. The layoffs are aimed more at improving the structure of Microsoft's sales teams rather than cost savings, according to the report.

Redmond, Wash.-based Microsoft employed 121,000 globally as of the end of March.

[Related: Partners: Microsoft Reorganization Will Sharpen Focus On Industry Solutions And Hot Technologies]

In a statement to CRN, a Microsoft spokesman said, "Microsoft is implementing changes to better serve our customers and partners. Today, we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated. Like all companies, we evaulate our business on a regular basis. This can result in increased investment in some places and, from time to time, redeployment in others."

The report comes a few days after Microsoft confirmed, via a memo to staff, that its sales and marketing teams are set to be reorganized. The memo did not mention layoffs.

Among the major changes from the restructuring: Microsoft's sales groups will be divided into two categories -- enterprise and small/medium/corporate -- while sales teams also will be organized by industry focus and by product category.

Industries covered are manufacturing, retail, education, financial services, government and health. The sales groups will be organized based on which product category they focus on -- apps/infrastructure, data/artificial intelligence, business applications and modern workplace.

The layoffs are expected to have some immediate implications for how Microsoft's partner base works with the company.

"It is going to mean less help in the field," said one top sales executive for a Microsoft enterprise partner, who did not want to be identified. "You are going to have to figure it out on your own. If you are connected and know how to navigate Microsoft, you'll be able to figure it out. If not, you are going to go into a black hole."

The restructuring follows strong cloud sales growth during the Microsoft's fiscal third quarter, ended March 31. Azure revenue rose 93 percent, while Office 365 revenue grew 45 percent and Dynamics 365 revenue surged 81 percent.

A TechCrunch report last week said the software giant plans to lay off "thousands" of employees, particularly around its sales teams. The report, citing unnamed sources, specified the company's enterprise customer and SME-focused units as areas that could be particularly hit by the sales cuts. A second report in Bloomberg late last week said global sales and marketing also could be impacted.

The layoffs would be the latest round of cuts at Microsoft in recent years. The company announced layoffs of 2,850 last year, a large percentage of which came from its sales group, and 1,850 from its smartphone business. In 2015, the company cut 7,500 jobs after its Nokia acquisition.