Microsoft is set to slash 18,000 jobs, hardest hit are their Nokia and Xbox divisions.
The US software Company is shutting down Xbox Entertainment Studios, its LA-based division tasked with developing original video content for the Xbox platform, the company has confirmed.
Microsoft Studios and Xbox head Phil Spencer said “For Xbox to be successful, we must remain committed to being a consumer-driven organization with the mission of meeting the high expectations of a passionate fan base, to create the best games and to drive technical innovation,” Spencer said.
He continued, “Change is never easy, but I believe the changes announced today help us better align with our long-term goals.”
Those goals being to develop video games – and not much else, it seems.
In a memo announcing the massive layoffs, Microsoft CEO Satya Nadella explained that “The first step to building the right organization for our ambitions is to realign our workforce.
Nadella said that he would cut about 14% of Microsoft’s workforce and take charges to earnings totaling up to $1.6 billion over the next year in his biggest move so far to reshape the US Company.
The majority of the cuts-about 12,500 of the 18,000 expected-would come from areas of overlap with Nokia mobile-phone business, which Microsoft acquired in April. Microsoft absorbed about 25,000 workers in the Nokia deal.
The layoffs will be the largest in Microsoft’s history, surpassing the more than 5,000 positions eliminated in 2009.
Microsoft’s workforce ballooned in recent years, from about 89,000 employees in 2010 to more than 127,000 people after the Nokia acquisition. Microsoft previously said it would cut at least $600 million in duplicative costs within 18 months of the Nokia acquisition.
The rumors of layoffs at Microsoft have been circulating for some time.
An internal email circulated after the Nokia deal pointed out some of the reorganization details of the merger. Ballmer noted in the memo that “Finance, Legal, HR, Communications, DX / Evangelism, Customer Care and Business Development will integrate functionally at Microsoft. Sourcing, customer logistics and supply chain will be part of Stephen’s Devices organization. ICM / IT will also integrate functionally for traditional IT roles.”