MICROSOFT is expected to cut thousands of jobs in its biggest cull in at least five years.
The bulk of the reduction in its 127,000 workforce is expected in the Nokia handset business, which it took on earlier this year. The latest job cuts could exceed the 5,800 posts axed in 2009.
But according to reports yesterday, the company’s engineering and marketing functions, including the European Xbox team in Reading, are also likely to be affected.
Since absorbing the handset business of Nokia this spring, Microsoft has significantly more employees than rivals Apple and Google.
Chief executive Satya Nadella is thought to be eager to make the organisation leaner to better deal with the fierce competition it is facing across its markets.
Last week, Nadella circulated a memo to employees promising to “flatten the organisation and develop leaner business processes”, but he didn’t comment on job cuts.
Nadella said he would address detailed organisational and fiscal issues for the firm’s new financial year, which started at the beginning of this month, when the software giant reports quarterly results on 22 July.
He said “nothing was off the table” as Microsoft changed its culture and added that it needed to place more emphasis on mobile devices and cloud computing. He said employees will see “fewer people get involved in decisions and more emphasis on accountability”.
Nadella stressed that the company will “streamline the engineering process” and employees will see “fewer people get involved in decisions and more emphasis on accountability”.
A spokesman for Microsoft in the UK, where the company employs 3,000 staff across offices including its Scottish headquarters at WaverleyGate in Edinburgh, said the group would not comment on speculation that first emerged in a report from Bloomberg.
Microsoft’s deal to acquire Nokia’s handset business for €5.4 billion (£4.6bn) signalled its intention to take on old rival Apple in the mobile technology market. The deal followed two years of collaboration that saw Nokia devices using Microsoft’s Windows operating system and followed a spectacular fall from grace for the firm that was once the world’s dominant mobile phone maker.
For Microsoft the buy-out was seen as providing a cheap way to catch up with Apple and Google and emulate their model of selling integrated devices and software.
Meanwhile, Microsoft is expected to surpass Yahoo for the first time in the $140.2bn (£81.7bn) worldwide digital advertising market, according to estimates by research firm eMarketer released yesterday.
Microsoft’s global advertising revenue share for 2014 is forecast at 2.54 per cent, edging ahead of Yahoo’s 2.52 per cent share.
Google will remain in the number one spot with a 31.54 per cent share, trailed by Facebook with 7.79 per cent.
Google, Facebook, Twitter, AOL and Yahoo, along with other social media and internet companies, depend heavily on advertising for revenue and profit.