Microsoft Corp. reorganized its sales and marketing operations in a bid to woo more customers in areas like artificial intelligence and the cloud by providing sales staff with greater technical and industry-specific expertise.
The changes will mean thousands of job cuts in areas such as field sales, said a person familiar with the restructuring who asked not to be named because the workforce reductions aren’t public. The company had 121,567 employees as of March 31.
Although none have been formally announced, most people believe the reorganization will probably include layoffs, which some don’t believe it will be very deep.
“Microsoft is implementing changes to better serve our customers and partners,” a Microsoft spokeswoman said.
Microsoft says it will now focus on two distinct areas: big enterprise customers, and then small to medium-sized businesses. Employees will be aligned around six industries — manufacturing, financial services, retail, health, education and government. They’ll focus on selling software in four categories: Modern workplace, business applications, apps and infrastructure and data and AI.
It’s not exactly clear what changes are in the pipeline, but an email from Judson Althoff, Microsoft’s executive vice president of worldwide commercial business, says sales reorganization is designed to “align the right resources for the right customer at the right time.” The magnitude of the potential layoffs is unclear, but the Wall Street says they will likely occur in offices all around the globe.
Last year, Microsoft announced that it would cut 2,850 jobs, including at least 900 from its sales group, having two months earlier said it would let go of 1,850 staff related to its smartphone business. The company said in January that it planned to cut 700 jobs, part of the previously announced restructuring.In July 2015, it also made 7,800 job cuts and wrote down $7.6 billion of its Nokia acquisition.
Microsoft is in a pitched battle with companies like Amazon.com Inc. and Alphabet Inc., for customers who want to move workplace applications and data to the cloud, as well as take advantage of advances in artificial intelligence. The company, which has not dramatically overhauled its salesforce in years, wants to tailor those teams better for selling cloud software rather than desktop and server solutions.
Ultimately, these changes most likely will see the company ramp up its efforts to sell subscription-based cloud services, a fast-growing business for Microsoft with a $15.2 billion run rate. While its traditional buy-once software business is still huge, sales have been declining as the cloud business erodes its growth.
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