Microsoft Azure China Business May Face A Major Adjustment

Microsoft Azure business in China may undergo a major organizational restructuring around the end of the 2024 fiscal year (around the end of June this year), with a focus on the sales team of over 700 people led by Hou Yang, who is at the top position in Microsoft Greater China.

According to multiple informed sources, the adjustment method this time may be as follows: in the sales lines of various segmented industries, small teams with similar functions will be integrated together to reduce communication overhead and operational inefficiency caused by scattered troops.

Specifically, Hou Yang had previously initiated an “experiment” in the Digital Native Business Unit: various teams that interact with customers, such as CSM team and AE team, are unified and reported directly to the general manager of the business unit Tian Zhuo. This streamlined communication levels and enhanced internal flatness within the business unit. Given that this “experiment” has achieved good results, it may be expanded widely across other industry lines in the future.

The potential upcoming adjustments may or may not lead to large-scale layoffs. According to information from departing employees at Microsoft Azure China, unlike the annual end-of-year elimination system implemented by many large companies in China, the elimination mechanism for the sales line of Microsoft China operates on a quarterly basis and is more competitive. Every quarter, some employees at the bottom of the rankings will be eliminated. Currently, the size of Microsoft Azure China’s sales team is maintained at around 700 people.

However, with possible mergers, streamlining, and flattening adjustments on the horizon, middle management positions may be reduced, especially frontline managers facing significant challenges.

Due to Microsoft’s fiscal year being based on the period from “July 1 of the previous year to June 30 of the current year,” some industry insiders believe that this organizational adjustment is not expected to be a minor move, as it is scheduled around the end of the 2024 fiscal year.

In fact, many large companies choose to make significant organizational adjustments around the end of their fiscal years in order to review and reorganize their strategies and prepare for challenges in the new fiscal year. Last December, Amazon Web Services (AWS) China made adjustments to its sales team. Now, following AWS China’s lead, Microsoft Azure China has also positioned itself for battle.

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At present, the global cloud computing industry, including the Chinese market, is facing a new round of reshuffling.

In the past two years, with the support of large AI models and the continuous improvement in cloud product maturity, Microsoft and Google have repeatedly outpaced AWS in the cloud computing market. The first-mover advantage accumulated by AWS is being rapidly weakened.

According to data from the international market research firm Synergy Research Group in October 2023, the current global public cloud IaaS market shares are as follows: AWS holds a 32% market share, Microsoft Azure holds 23%, and Google Cloud holds 11%. In the first quarter of this year, the market shares of AWS, Azure, and Google Cloud were 31%, 25%, and 11% respectively. The latter two are accelerating their efforts to narrow the gap with the leader AWS.

Industry insiders estimate that if this trend continues unchanged, by the end of next year, Microsoft Azure may catch up with AWS and take over the global cloud computing throne. The ranking of foreign-funded clouds in China will also face new variables.