Microsoft Azure China Business Facing Potential Major Adjustments Amid New Policies

20 Jun, 2024

Microsoft Azure China Business Facing Potential Major Adjustments Amid New Policies

Microsoft Azure's business in China may undergo a significant organizational restructuring around the end of the 2024 fiscal year (end of June), focusing on the sales team of over 700 people led by Hou Yang, head of Microsoft Greater China. Sources indicate that the restructuring might integrate small teams with similar functions in various segmented industries to reduce communication overhead and improve operational efficiency.

Previously, Hou Yang initiated an experiment in the Digital Native Business Unit, where customer-interacting teams like the CSM and AE teams were unified and reported directly to the general manager, Tian Zhuo. This streamlined communication and enhanced internal flatness, showing promising results that might be expanded to other industry lines.

The upcoming adjustments might not lead to large-scale layoffs. Unlike many large Chinese companies' annual end-of-year elimination systems, Microsoft China’s sales line operates on a quarterly competitive elimination basis, maintaining around 700 sales team members. Potential mergers, streamlining, and flattening could reduce middle management positions, particularly frontline managers.

Microsoft’s fiscal year runs from July 1 to June 30, leading insiders to expect significant organizational adjustments around this time to review strategies for the new fiscal year. Following AWS China's adjustments last December, Microsoft Azure China is positioning itself for similar strategic changes.

The global cloud computing industry, including the Chinese market, is experiencing a reshuffling. With large AI models and improved cloud products, Microsoft and Google have outpaced AWS in the market. Synergy Research Group data from October 2023 shows AWS with 32% market share, Microsoft Azure with 23%, and Google Cloud with 11%. This trend suggests that Microsoft Azure might catch up with AWS by next year, impacting global and Chinese cloud market dynamics.