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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2584

The Bloodbath of Job Cuts at Microsoft

Hemantha Abeywardena writes from London…

The unprecedented job cuts announced by Microsoft on Thursday, took even the most pessimistic analysts in the industry by complete surprise: on one hand, it is the biggest in the 39-year-old history of the software giant; while adding insult to the injury, on the other hand, Microsoft is going to do it within a year, leaving the unfortunate technical folks and their dependents in a very destructive lurch of uncertainty.

Satya Nadella, the Indian-born CEO of Microsoft, announced the job cuts by an internal email to the entire workforce at Microsoft. It marks a clear deviation from his flamboyant predecessor, Steve Ballmer, who used to enjoy the lime light in the full glare of publicity – while announcing things at good times, though.

Most of the job cuts, nearly 2/3rd of them, are going to be in its Nokia phone unit, which Microsoft bought with heavy fanfare of optimism in reaching the ‘watershed’ of the company in April this year, in the hope of having a foothold in the mobile phone market.

The acquisition of Nokia by Microsoft for a staggering $7.2 billion was Mr Ballmer’s parting ‘gift’ to Microsoft – loss making mobile giant with over 25,000 work-force. Although, Microsoft completed the deal in April this year under the leadership of Mr Nadella, Mr Ballmer had made a firm decision much before that to have his way, while overruling those who had reservations about the merits of such a major decision.

Even Mr Ballmer admitted at that time some layoffs are inevitable, given the size of the workforce that Microsoft was going to absorb into its existing 99,000 employees in 2013. He, however, in his craziest nightmare, would have never estimated a single set of job cuts on this scale.

As for the victims at the receiving end, it is not easy to train them new skills in such a short period for a number of reasons: they have to identify the new trends in rapidly-evolving technological realm; then, they have to invest, learn and above all, master the skills in real-world platforms in order to stand out and attract recognition. In short, it takes time even for those who are naturally gifted.

“The tech industry does not respect tradition, it only respects innovation," said Mr Nadella in his email. Mr Nadella has been referring to the company as ‘productivity and platform company’, since he became the CEO, while referring to the mobile and Cloud-based services. He emphasized the same in his latest email – on a more urgent note, though.

It is the strongest indication yet that the company, at last, has abandoned its enthusiasm to embrace the hardware business – part of the hastily adopted bull-in-the-China shop strategy to take on its competitors, while being very badly eclipsed by both their performance and growing market share amidst intense investor concerns.

It is important to note that Mr Nadella has been working on Cloud platform of Microsoft before becoming the CEO. Since, as usual, Microsoft has been a late arrival to Cloud computing as well – a string of monumental failures - a few major players had been dominating it considerably, when Microsoft finally woke up, especially by Amazon and Salesforce.

To his credit, Mr Nadella managed to initiate and expand Microsoft’s Cloud platform in a relatively short time in such a way that the company could make a significant presence in the realm. In return, he won accolades, respect and loyalty, both from the top echelons of the management and colleagues. The reputation he had won in the company catapulted him to the short-list of candidates for the top job, when Mr Ballmer finally decided to quit.

Mr Nadella has been urging Microsoft employees the need of innovation for the company to be successful; he is acutely aware of Microsoft’ present share in what it used to dominate for decades – from nearly 90%, down to just 14%; its success mainly comes from Business-based products and services, not traditional things any more.

There may be junior level product developers who are capable of innovating. The trouble, however, is the obstacles that such an idea would potentially face, while bubbling up the messy column of management.

It is encouraging to see that Mr Nadella has correctly identified the problem. He says that he wanted to cut down on the layers of management that exist between him and the ground level programmers, in order to streamline the flow of ideas.

Unfortunately, we have heard of the big ideas before on corporate platforms, which do not necessarily materialize in line with the dreams of CEO’s. The workable approach, as it happened at Apple on Steve Job’s watch, is making it the mission to let the flow of ideas originate from the top to bottom – not vice versa.

Since Mr Nadella has the perfect technical skills, he fulfilled one half of his challenging job. In order to complement it, however, it is him who has to come up with his vision for the company, not his relatively insignificant subordinates, as he knows very well how difficult the latter is in reality, as someone rose through ranks at Microsoft in a period of 22 years.

Microsoft will announce it latest quarterly performance on July 22nd for its shareholders. Analysts hope that the announcement of massive job cuts would not be used as a digger to bury bad news, if there will be any – in a pre-emptive move, of course.

- Asian Tribune -

The Bloodbath of Job Cuts at Microsoft
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