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Microsoft rounds out job cuts, leaves 3,000 jobless

Posted: 30 Oct 2014     Print Version  Bookmark and Share

Keywords:Microsoft  job cut  Nokia 

Microsoft Corp. gave marching orders to some 3,000 workers on Wednesday, Oct. 29, rounding out its plan to cut 18,000 jobs or 14 per cent of its workforce, Reuters reported.

The latest in the series of the tech giant's largest layoff sweep involved 638 positions in the company's Redmond headquarters in Washington, according to a Microsoft spokesperson. The rest was spread across numerous business units in many countries.

First announced in July, the first wave of layoffs left approximately 13,000 unemployed. The next came in September where another 2,100 was dismissed. Upon completion of the job reductions, Microsoft's workforce will be around 110,000 employees.

About 12,500 job cuts were related to Nokia's handset division acquisition. The move has been part of what Microsoft called an evolution of its organisation and culture. (Read full story: 18,000 Microsoft employees lose jobs)

CEO Satya Nadella said the company will have fewer layers of management and extend the scope of managerial responsibility, with the goal of creating "more productive, impactful teams across Microsoft."

Microsoft to turn Apple-like with Nokia?

Microsoft initially announced its agreement to purchase the Devices & Services division of Nokia, as well as license the Finnish firm's patents and mapping services for a total of $7.2 billion in cash a year ago. The deal closed in July.

In its first fiscal quarter, Microsoft saw its revenue rise to 25 per cent, before plummeting due to $1.14 billion in integration and restructuring charges related to the layoffs and to the Nokia business integration.

Brokered by Nadella's predecessor, Steve Ballmer the Nokia acquisition was seen as a strategy to turn Microsoft into an Apple-like manufacturer of tightly integrated devices and software.

"Our approach to first-party hardware going forward is clear: At times we'll develop new categories like we did with Surface. And we will responsibly make the market for Windows Phone," Nadella said during an earnings call in July. "However, we're not in hardware for hardware's sake, and the first-party device portfolio will be aligned to our strategic direction as a productivity and platform company."

Nokia in India

Meanwhile in India, Nokia announced it would stop the operations at its Chennai plant from Nov. 1. In a statement, the company confirmed that it "will suspend handset production at the Sriperumbudur facility" due to lack of order inflows from Microsoft. (Read full story: Nokia shelves production at Chennai plant)

The handset maker was forced to leave the factory in Chennai out of the deal due to a ?21,000 crore income tax dispute with Indian government, according to Deccan Chronicle.

Microsoft said that the asset freeze imposed by the tax department is holding Nokia back from "exploring potential opportunities for the transfer of the factory to a successor." This led to the decision to terminate the manufacturing services.

Consequently, the labour union staged protests and asked the state and Centre governments to take over the factory. The government, however, encouraged a peaceful solution.

Without government support and with about a thousand of livelihoods at stake, the union turned to Nokia management.

Labour union representatives agreed to negotiate severance packages with Nokia's management for the remaining employees in the Sriperumbudur facility. The management proposes to offer three months of salary for every year of service with a cap of 15 months, an executive told the Economic Times.

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