Recently, Microsoft cut the jobs of 18,000 employees, plus “shadow workers”, or the vendors and contractors who indirectly work for Microsoft. All told, the cuts equaled about 70,000 lost jobs, which sounds pretty terrible, on the surface. But for Seattle, a sleeper city in terms of the tech industry, it can actually work out to be a bit of a Klondike Gold Rush for it.
What the Job Cuts Entail
For the first time in Microsoft’s history, the Redwood, Washington-based will be entering uncharted territory as it makes its most severe round of cuts: 18,000 jobs. It’s the most by far in the company’s storied history (the last biggest round was 5,800 in 2009), and CEO Satya Nadella’s move means roughly 15% of Microsoft’s workforce will be gone. They have 127,104 employees worldwide, but the majority of the cuts (12,500) will come from the newly acquired Nokia; to make things worse, about half the employees that joined Microsoft from Nokia will be let go.
Cutting 18,000 jobs will save Microsoft money, but in the long-term. For now, they’ll have to deal with severance pay and benefits packages that will total $1.1 to $1.6 billion.
But jobs and money aren’t the only thing Microsoft will be distancing itself from, as the company won’t be making Android phones through Nokia anymore. Instead, they’ll be turning their attention to Lumia products that run Windows, which is understandable for a company whose bread and butter has been Windows. In a purely business sense, though, discontinuing manufacturing of Android phones — a hugely successful line — to replace it with one of the poorest-selling smartphones doesn’t seem to make no sense at all. If Windows-based smartphones didn’t work before, why would they now — and with a radically thinner workforce to pay attention to all the finer points?
Enter Seattle, and How It’ll Swoop in to Save the Day
This is a prime opportunity for Seattle, which is just 16 miles away from Redmond, to capitalize on Microsoft’s losses. Once the job cuts are complete, there’ll be tens of thousands of tech-savvy employees looking for work, and Seattle companies will have more than their pick of the cream of the crop. Companies like Amazon and Zillow, businesses that are on the up-and-up, will be using the mass layoffs as a chance to strengthen their own companies and possibly pull ahead of Microsoft.
Further sweetening the deal, Seattle companies will lure away employees by offering job perks like free lunches, paid dry cleaning, or a half-share of a sustainably raised hog (a bit odd, but it definitely grabs your attention). The main goal is to attract the tech industry’s best and brightest minds, regardless of what it takes to grab them, and a sudden pool of at least 18,000 fresh new faces doesn’t come along very often.
In turn, the new companies that hire these employees — like software developers and engineers — will use their talents to increase the size and quality of their companies, which means even more job openings will open up. And as the cycle continues, it may not be long before employees who weren’t laid off from Microsoft may choose to jump ship, anyway.
Another factor that’ll cause employees to rush away from Microsoft and into the waiting arms of Seattle rivals is the disparity in stock value. Microsoft’s stock values haven’t become totally worthless, but they’re not as much of a blue chip stock as they once were. In turn, shares in companies like Amazon and Zillow are better performing, giving workers a more attractive reason to commit there.
After all, if you’re working for a company like Microsoft that not only seems to make poor business decisions but can’t seem to right the ship enough to hold onto its employees, wouldn’t you be swayed by the option of working elsewhere? And wouldn’t that siren song grow even louder if prospective employers were bidding for your services by promising perks left and right, as well as being able to own shares in a stock that’s continually and strongly rising?
Only time will tell if this will be Seattle’s new golden age in technology, but the pieces definitely seem to be in place.