REDMOND, WA—Tech giant Microsoft Corp. began laying off 13,000 workers worldwide Thursday, the first round of a planned 18,000 job cuts over the next 12 months. The 14% reduction will be the largest in the company’s history. A company spokesman tells GlobeSt.com that about 1,350 of the layoffs will occur in the Puget Sound region, or about 3% of the 43,000 employees based at or near Microsoft’s Redmond, WA headquarters.
In a company-wide email Thursday to employees, Microsoft CEO Satya Nandella wrote, “The first step to building the right organization for our ambitions is to realign our workforce.” Of the worldwide total, the recently acquired Nokia Devices and Services arm is expected to account for about 12,500 jobs, “comprising both professional and factory workers.”
With that as the backdrop, Stephen Elop, formerly Nokia’s CEO and now EVP of Microsoft Device Group, said in an email to group employees that the company would concentrate future development of high-end Lumia devices in Salo, Finland, while the budget priced phones will be developed in Tampere, Finland. Meanwhile, the company will “ramp down engineering work” in Oulu Finland, where some of the software for Nokia’s Asha phone line was developed.
“While we plan to reduce the engineering in Beijing and San Diego, both sites will continue to have supporting roles, including affordable devices in Beijing and supporting specific US requirements in San Diego,” Elop wrote. While the Espoo and Lund facilities in Finland will continue to focus on application software development, “we plan to right-size our manufacturing operations to align to the new strategy and take advantage of integration opportunities.”
The group expects to focus phone production mainly in Hanoi, wrote Elop, “with some production to continue in Beijing and Dongguan, China. Other Microsoft manufacturing and repair operations will be shifted to Manaus, Brazil and Reynosa, Mexico, respectively, while the company will begin “a phased exit” from Komaron, Hungary.
Although tech on the whole is among the strongest growth areas for office-using employment, Microsoft is not an isolated case among more mature companies in the sector. Hewlett-Packard may reduce its 250,000-strong workforce by as much as 20% over the next few years. Some 13,000 IBM employees could face pink slips or transfers, and Reuters reported that both Intel Corp. and Cisco Systems have announced staff reductions of about 5% within the past year.