Wade Tyler Millward
‘As Microsoft gets ready for the new fiscal year, it is making sure the right resources are aligned to the right opportunity,’ according to the statement.
Microsoft has confirmed to CRN that it has cut open jobs in its Azure, security and other business segments.
In a statement, a Microsoft spokesperson said the company still expects to grow its overall headcount as it aligns resources. The Redmond, Wash.-based tech giant’s 2023 fiscal year started July 1. Fourth quarter and fiscal year 2022 earnings are expected on Tuesday.
“As Microsoft gets ready for the new fiscal year, it is making sure the right resources are aligned to the right opportunity,” according to the statement. “Microsoft will continue to grow headcount in the year ahead, and we will add additional focus to where those resources go.”
Did Microsoft Cut Jobs?
The Microsoft spokesperson also confirmed details in a Bloomberg article Wednesday that said open Azure and security jobs were cut.
The news comes during Microsoft’s annual Inspire conference aimed at partners. The event was held online this year as the world continues to grapple with COVID-19.
Despite the cuts, multiple Microsoft executives during the event highlighted opportunities for partners to sell customers on the tech giant’s cloud and security offerings, telling partners that the company will make a push this year for packages of cloud products focused on specific industries – such as health care and financial services.
Microsoft will honor job offers already made and still hire for critical jobs, according to Bloomberg. Microsoft revealed in May slower hiring in its Windows, Office and Teams divisions.
Microsoft also confirmed layoffs in July. Microsoft employed about 181,000 people at the end of June 2021, according to a regulatory filing. The cuts hit less than 1 percent of the company.
Other tech companies have laid off employees amid concerns over an upcoming recession in the U.S. and growing inflation. Boston-based Snyk cut about 30 employees from its workforce as part of its efforts to “navigate looming economic headwinds” and ensure long-term growth.
Cybersecurity technology developer IronNet said in a recent regulatory filing that the company would lay off about 55 of its employees, or about 17 percent of its total headcount. Software developer OneTrust reduced its headcount by about 950 people, or about 25 percent of the company.
Oracle has recently mulled reducing costs by as much as $1 billion and as a result, possibly letting go of thousands of its employees as early as August.
Morgan Stanley On Microsoft
A Thursday note from investment bank Morgan Stanley said that despite PC shipment declines pressuring results for Windows original equipment manufacturers (OEMs), foreign exchange headwinds and weakening consumer demand, “solid feedback on resiliency of the commercial business from our channel conversations and another set of impressive Microsoft specific results from our most recent CIO survey … bolster our confidence in the ~70% of revenues (and ~80% of gross margins) which investors focus most on to sustain Microsoft‘s growth going forward.”
According to a Morgan Stanley and AlphaWise survey of chief information officers (CIOs), Microsoft was the most cited vendor for expected largest gain of incremental share of IT budgets due to the shift to cloud in 2022 compared to 2021. Microsoft was followed by Amazon, Google, Palo Alto Networks and ServiceNow.
The vendor expected to see the largest loss of incremental share of IT budget due to the shift to cloud was Hewlett Packard Enterprise, followed by Dell, IBM and Red Hat, Oracle and then VMware, according to Morgan Stanley.
Another AlphaWise and Morgan Stanley survey put Microsoft as the vendor respondents use or are likely to use to manage hybrid cloud environments, a number that has grown each quarter from the second quarter of 2021 to the second quarter of 2022.
Microsoft was followed by Amazon Web Services, VMware, Google and Red Hat.
Another Morgan Stanley note Thursday put the chance of a recession in the next 12 months at 36 percent. The company expects to see more conservative outlooks from software vendors looking forward.
“Over the past several weeks, the data points from our survey work and channel conversation began to show software demand starting to bend in the face of these mounting macro headwinds,” according to a Morgan Stanley report.
It continued: “We expect software companies will follow suit, and begin to incorporate longer deal cycles at the very least, if not outright slowing demand, in addition to rising FX (foreign exchange) headwinds into the forward outlooks as we move through CY (calendar year) 2Q22 earnings season.”
Morgan Stanley placed Microsoft on a list of software companies most likely to protect free cash flow should the economy turn, alongside Crowdstrike, Palo Alto Networks, Salesforce, ServiceNow, and others. Morgan Stanley put Atlassian, Datadog, MongoDB, Snowflake and others on a list of companies most likely to perform best after a downturn.
“Despite the macro weakness, Microsoft remains well positioned to take advantage of public cloud adoption, large distribution channels, and expansive installed customer base,” according to Morgan Stanley. “This should lead to a topline growth in the low to mid teens over the next several years.”