Microsoft’s Shift to Cloud Services: ‘Good’ for Company But ‘Bad’ for Employees

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Microsoft’s Shift to Cloud Services: ‘Good’ for Company But ‘Bad’ for Employees

Microsoft Corporation (NASDAQ:MSFT) is expected to make changes to its sales team as the company shifts its focus from traditional software to selling cloud services.

The Redmond-based tech titan is moving away from traditional software licensing business to subscription-based cloud services, according to a report from The Wall Street Journal.

The organizational changes will reportedly result in a loss of thousands of jobs. According to the report, the internal reorganization won’t have any major impact on Microsoft’s day-to-day business but thousands of employees, mostly from the company’s sales team, are going to lose their jobs.

Last year, Microsoft announced more than 2,800 job cuts, including 900 from the company’s sales team.

Microsoft Cloud Computing Business

Microsoft Corporation (NASDAQ:MSFT) sees strong growth in its Intelligent Cloud segment, which includes the Microsoft Azure cloud platform.

For the third fiscal quarter ended March 31, 2017, the tech giant reported revenue from its Intelligent Cloud division of $6.8 billion, a year-over-year increase of 11%. Server products and cloud services revenue rose 15%, driven by Azure revenue growth of 93% year-over-year.

“Strong execution and demand for our cloud-based services drove our commercial cloud annualized revenue run rate to more than $15.2 billion,” Microsoft CFO Amy Hood said in a statement.

For the third fiscal quarter, Microsoft posted total revenue of $22.09 billion, versus $20.53 billion a year ago. Its net income was $4.8 billion, up from $3.8 billion in 2016.

“Our results this quarter reflect the trust customers are placing in the Microsoft Cloud,” Microsoft CEO Satya Nadella said in the earnings statement. “From large multi-nationals to small and medium businesses to non-profits all over the world, organizations are using Microsoft’s cloud platforms to power their digital transformation.”

Meanwhile, shares of Microsoft Corporation (NASDAQ:MSFT) closed down 1.10% on Monday. The stock is nearly 10% so far this year. During the last 12 months, the company’s stock has surged more than 33%.