Microsoft restructuring will cost 18,000 jobs, most in Nokia unit

BANGALORE, INDIA: Microsoft has announced that it will cut 18,000 jobs over the next 12 months, as part of its organizational restructuring plan. Microsoft CEO Satya Nadella delivered this news yesterday to the employees in a memo, which Microsoft released publicly as well.

This is not an absolute shocker to the employees as Nadella gave the hint of the company's restructuring plan in his earlier memo addressed to the employees on July 10, where he mentioned about his vision and plans to transform the organization culture and modernizer the engineering processes.

Out of the 18,000 job cuts, about 12,500 professional and factory positions will be eliminated to align the recently acquired Nokia Devices and Services business unit.

Nadella also wants to trim down the management layers to make the company more agile. He said, "We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft.

The actions associated with the plan are expected to be substantially complete by Dec. 31, 2014, and fully completed by June 30, 2015.

The company expects to incur pre-tax charges of $1.1 billion to $1.6 billion over the next four quarters, including $750 million to $800 million for severance and related benefit costs, and $350 million to $800 million of asset-related charges.