Microsoft Partners Expect More Emphasis On The Channel Following Round Of Layoffs

As Microsoft confirmed Thursday that a new round of job cuts has begun, solution providers said the moves appear aimed at making the company more partner-centric, amid a push to increase sales of cloud and other fast-growing products.

The layoffs are part of the company's efforts "to better serve our customers and partners," a Microsoft spokesperson said in a statement to CRN.

"Microsoft is reducing the size of its direct sales force, particularly in SMB, pushing more to partners or self-service," said Allen Falcon, CEO of Westborough, Mass.-based Cumulus Global.

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

The layoffs are part of a broader reorganization of Microsoft's sales and marketing teams, initially disclosed by the company this week in a memo to staff.

At Washington D.C.-based New Signature, CEO Jeff Tench called the moves by Microsoft "a continuation of their shift in investment to be more focused on vertical solutions and cloud technologies, while realigning to better meet the needs of their customers and partners."

Altogether, the changes are "positive for the future growth of Microsoft and New Signature's business," Tench said.

In February, Microsoft rolled out its One Commercial Partner business to combine its ISV, Enterprise Partner and Worldwide Partner Group teams, as well as a new unit, Microsoft Digital, to incentivize partners to sell its cloud services.

A Microsoft spokesperson said in the statement Thursday that "we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated."

Microsoft declined to comment on the number of layoffs that are under way or offer other specifics. CNBC reported that Microsoft is eliminating up to 3,000 jobs as part of this round of cuts. Redmond, Wash.-based Microsoft employed 121,000 globally as of the end of March.

As part of the broader reorganization, 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.

Tench, of New Signature, said his firm is "very encouraged by Microsoft's series of partner motions – 'code with,' 'build with,' 'grow with,' and 'sell with' – which emphasizes the partnership needed to drive digital transformation for our joint customers."

"At New Signature, we have designed our business to deliver on each these motions while unlocking the full power of the Microsoft cloud for customers across different verticals. We view the changes Microsoft is making as a positive indication that they are fully committed to growing their cloud business and partner ecosystem," Tench said.

The reorganization follows strong cloud sales growth during 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.

Ric Opal, senior director at Oak Brook, Ill.-based SWC Technology Partners, said he believes that "partners who are committed to Microsoft are going to be provided with an opportunity to sell with them in a more intimate way than ever before."

"As a Microsoft partner, the goal of these changes is to reduce friction, in order to provide an easier way for partners to transact with Microsoft—as well as a much better experience for customers," Opal said.

The layoffs, which had been widely rumored over the past week, were little surprise to Microsoft partners on Thursday.

"In this new partner self-serve environment, this seems a natural progression," said Michael Goldstein, CEO of Fort Lauderdale, Fla.-based LAN Infotech. "We hope that this will give increased focus in new development areas."

The layoffs are 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.