San Francisco— According to fresh reports coming in, Software behemoth Microsoft Corp. is seriously considering reducing its workforce across various divisions and could announce the plans next week, according to a report in The Wall Street Journal, citing people familiar with the company’s plans.
Citing unnamed sources familiar with Microsoft’s plans, the newspaper said the company is considering “significant workforce reductions” across multiple divisions. The Journal further stated quoting the same sources that the software giant is considering cutting fewer than the 15,000 staff rumored in recent weeks — a figure that would total 16 per cent of its workforce.
However, the Journal also said that no firm plans for the cutbacks have yet been formulated and Microsoft could turn the tide by finding some other alternative methods to control costs, avoiding the need to make layoffs.
If Microsoft does announce the cutbacks, it would join some other influential technology companies that have recently scaled back employee head counts, including Google Inc. and Oracle Corp. The former, just early this week said that it is reducing 100 recruiters and closing engineering offices in Texas, Norway and Sweden, while the latter reportedly made “major” cuts in its workforce last week, with more in the offing.
Rob Helm, an analyst at Directions on Microsoft, a research company that focuses on the software developer, does not think large cuts are likely. “I do not think we will witness any major layoffs next week,” said Helm.
If true, the lay-offs would come in the week Microsoft announces its second-quarter results — scheduled on January 22.
Historically, Microsoft has astutely maneuvered many massive layoffs. According Helm’s quotation, for instance, the largest was a drop of some 600 employees in the Microsoft TV group during the dot-com bust early in the century. “But that was more about scaling back and refocusing,” Helm argued, not layoffs for their own sake.
Arguably that is not to say that Microsoft is absolved from the same pressure that has been driving other major technology companies to shed jobs. “The reality is that Microsoft has to protect its margins, and some of the highest-margin customers, like those in the financial sector, are really hurting. [Microsoft] has to keep costs under control, too,” Helm said.
However, Microsoft certainly would be banking on the fourth-quarter to not just sell PCs but also Windows mobile devices and Zunes. Last year, Microsoft’s second fiscal quarter — which spans the holiday shopping season — reported $16bn in revenue, $2bn more than its previous record.
Should Microsoft drop the ax, or mobilizes staff around, changes will likely be felt in the loss-making online units and – possibly – entertainment and devices.
Company chief executive Steve Ballmer last week re-committed Microsoft to continued spending on R&D while speaking at the Consumer Electronics Show (CES). Last year Microsoft spent $8bn on R&D, an amount that has grown steadily since 2005 as it invests online.
Nevertheless, Microsoft declined to comment on The Wall Street Journal report. “Microsoft does not comment on rumors or speculation,” a spokeswoman said in a statement.