To remain profitable, large businesses sometimes have to make tough decisions that impact thousands of people. That’s the situation tech giant Microsoft finds itself in right now.
In late July, the company revealed it would lay off nearly 3,000 employees — 2,850, to be exact — as it aims to restructure its sales team and move away from the mobile phone hardware business.
That number includes the 900 layoffs already completed in its sales team.
Michael Mauboussin: Here’s what active managers can do
What Microsoft’s Job Cuts Mean
The layoffs at Microsoft will largely impact two of its units: Sales and phones.
The cuts in the mobile phone business weren’t totally unexpected. Earlier this year, the company said it would lay off 1,850 people in that unit, just about two years after Microsoft purchased Nokia’s mobile handset company.
On its surface, that move makes some sense. Android and iOS devices currently dominate the mobile phone industry, with very few consumers using Windows phones. Microsoft instead intends to focus on apps and software that can be used on the mainstream Android and iOS platforms, such as the mobile version of its popular email program, Outlook.
As for sales, much of that team is dedicated to working with the company’s traditional software business. As more and more of Microsoft’s efforts funnel toward cloud computing, however, the software arm and its associated sales teams are viewed as less essential.
That said, sales teams are still necessary. The company has set a goal of $20 billion annual sales from its commercial cloud products by fiscal year 2018.
Experts Understand the Moves
Cutting thousands of employees is never easy, but industry insiders can understand the need to do so. In this case, while millions use Microsoft products on a regular basis, it’s common for them to do so without being nudged by salespeople.
“Microsoft is a huge company with hundreds of product lines,” says Geoffrey Ives, owner of the sales technology company Map Business Online. “I use multiple Microsoft products every day. [But] rarely does a sales person help me make decisions on Microsoft products.”
Ives notes that the complexity of Microsoft’s many products could be one factor working against its sales teams. He says that, oftentimes, products require as many as three passwords, along with the help of a tech expert to install, effectively making an army of salespeople meaningless.
What the Future Holds
It’s obviously difficult to predict the future of business, particularly in the fast-moving tech sector. But we do know changes will happen at Microsoft.
The company’s timing does give it a bit of breathing room. It says the nearly 3,000 job cuts won’t be completed until mid-2017, giving the company about a year to assess the situation.
In appears to make business sense to cut positions in mobile phones if Microsoft plans to move away from the hardware segment of that industry. And it may not need as many salespeople for its traditional software business if much of that is moving to cloud-based services.
That said, industry innovations such as map visualization might help the salespeople it retains become even more effective and efficient.
By Kayla Matthews, Productivity Bytes.