Microsoft and Google Initiate Layoffs in Cloud Divisions

Microsoft and Google have begun cutting jobs in their cloud business segments, according to recent media reports.
Share of Cloud providers Q1 2024 Canalys report
In a February note, analysts at Canalys said they expect global cloud infrastructure services spending to increase by 20 percent in 2024, compared with 18 percent in 2023. Cloud infrastructure services spending grew 18 percent to $290.4 billion in 2023 from $247.1 billion in 2022.

Analysts at Gartner recently said spending on public cloud services is forecast to grow 20.4 percent to $675.4 billion in 2024 from $561 billion in 2023 – driven by demand for artificial intelligence (AI) solutions.

Microsoft

Microsoft is eliminating hundreds of positions within its Azure cloud unit, Business Insider reported on Monday. This move adds to a series of layoffs in the technology and media industries this year. The layoffs will affect teams including Azure for Operators and Mission Engineering, with up to 1,500 job cuts in Azure for Operators alone.

“Organizational and workforce adjustments are a necessary and regular part of managing our business. We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners,” a Microsoft spokesperson told Reuters.

These cuts follow the company’s reduction of 1,900 jobs at Activision Blizzard and Xbox in January.

Despite the layoffs, Microsoft’s Azure cloud is experiencing significant growth, fueled by heavy investments in AI and a strategic partnership with OpenAI, the maker of ChatGPT. The Azure for Operators and Mission Engineering teams are part of the Strategic Missions and Technologies organization, formed in 2021 to focus on quantum computing and space initiatives. It has secured 53,000 Azure AI customers, with over a third acquired in the past 12 months.

Microsoft Azure, the second-largest cloud service provider, saw its market share increase to 26 percent in Q4 2023, against 23 percent in Q4 2022.

Additionally, Microsoft is restructuring its mixed reality organization but will continue to sell its augmented reality headset, the HoloLens 2, a company spokesperson confirmed to Reuters.

Google

Alphabet-owned Google is laying off at least 100 employees from various teams within its cloud unit, CNBC reported on Monday. The affected roles include positions in sales, operations, engineering, consulting, and “go to market” strategy, according to internal correspondence.

“We continue to evolve our business to meet our customers’ priorities and the significant opportunity ahead,” a Google spokesperson told Reuters in an emailed statement. “We maintain our commitment to investing in areas that are critical to our business and ensure our long-term success.”

Google Cloud is the third largest provider and grew 26 percent to account for 10 percent of the market in Q4 2023.  As of 31 December 2023, Google Cloud accumulated US$74.1 billion in revenue backlog, up from US$64.3 billion at the end of 2022. Google Cloud has also maintained its focus on expanding channel partnerships to drive growth. It has tripled the number of co-sell deals with partners since 2022.

These layoffs come after Google let go of an unspecified number of employees across different teams in April, as part of efforts to reduce costs. Earlier in January, Google also laid off hundreds of employees, reflecting the broader trend of job cuts across the tech and media industries amid economic uncertainty.

Baburajan Kizhakedath

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