Fears mount over Microsoft job losses

A view of Microsoft and Nokia signs in Peltola, Oulu July 16, 2014. [Photo/Agencies]

Microsoft Corp's biggest reduction in company history could cost China more than 1,000 jobs, analysts warned on Friday.

They also fear new CEO Satya Nadella's massive downsizing plan - which will focus on the device-making segment - may not work well in China, the world's largest smartphone producer and buyer.

Microsoft announced on Thursday plans to lay off as many as 18,000 employees globally in the next year as it tries to absorb the handset group recently acquired from Nokia Oyj and squeeze operating costs in other units.

The United States software giant refused to discuss reduction plans for China.

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Charlie Dai, principal consulting analyst at consultancy firm Forrester Research Inc, said Microsoft may eliminate at least 1,000 jobs in the country, including research, marketing and sales.

"The development team Microsoft inherited from Nokia in China is not its core asset. Every segment that is not close to the company's cloud strategy can be treated as legitimate slim-down target at this moment," said Dai.

Stephen Elop, former Nokia CEO who currently heads Microsoft's devices group, said in an open letter that the company plans to reduce its engineering team in Beijing. The team will have "supporting roles including affordable devices".

Elop also said Microsoft is moving major smartphone production to Hanoi, leaving "some" production in Beijing and Dongguan in southern China.

"My colleges and I are extremely upset about the upcoming job cuts," said a Microsoft employee under the condition of anonymity.

"Rumors are going around now. Many say hundreds will be axed while some versions have a far bigger number," the employee said.

Analysts argued cutting loose with China in smartphone design and manufacturing does not benefit Microsoft, as it aims to become a mobile company similar to Google Inc.

"China is the biggest phone market in the world, it is important to understand the local requirements for Microsoft's future product development," said Kitty Fok, managing director of research company IDC China.

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