Microsoft announced Thursday plans to cut 3,000 sales jobs, part of a move to reorganize its global sales operation around the cloud, CNBC reports. Microsoft has 121,000 employees around the world, and the cuts represent less than 10% of its sales force and three-quarters of those impacted are outside the U.S.
According to reports, the point of the layoffs is not to cut costs but to restructure how it sells different types of technology. In a statement to CNBC, Microsoft said that on Thursday it was beginning the process to notify some employees their positions are under consideration for cuts.
The restructuring makes room for employees in specific verticals to sell larger service or product packages, according to the report. In particular, the cuts will make way for increased focus on selling Azure products and services.
Rumored since last week, the formal announcement of Microsoft's job cuts highlight just how much the company's market has changed. Still dominant as a software provider — and the creator of an operating system powering half a billion of computers around the world — Microsoft has started to shift its focus to the cloud market.
Already, it is one of the dominant providers in the space.
Though catching up to Amazon Web Services is a long shot, Gartner ranks Microsoft as the number two cloud provider, way ahead of the rest of the service provider back. Shifting its cloud sales operation may position Microsoft to increase its cloud market share.
Even if it never catches up to AWS, Microsoft Azure has had a huge payoff for the company. In the first quarter of this year, Microsoft Azure grew 93% year-over-year. Experts say Microsoft is particularly dominant in the hybrid deployment and cloud migration space.
But Microsoft is no stranger to layoffs. The restructuring announcements have become seemingly commonplace in July for the past few years. In July 2016, Microsoft announced about 3,000 job cuts as part of the dissolution of its smartphone hardware business. The July prior, 7,800 positions were cut, mainly from its Nokia phone business. And in July 2014, the company announced 18,000 positions would be cut, again largely from the Nokia segment of Microsoft.
For Microsoft, and many other old school vendors, cloud technology is the future and vendors are working to align entire business strategies around it. Unlike some of the other vendors, however, Microsoft is performing well in the market. By comparison, when Cisco announced its most recent round of layoffs in May, it also said it expects revenues to fall in Q4.