Why Is Microsoft Closing Its Skype London Office?

Microsoft is closing its Skype office in London — a move that is expected to make some 220 people redundant and leave many more wondering “Why?”

The Financial Times (subscription required) first reported that Microsoft was cutting back operations in the UK. In a subsequent story in The Guardian, Microsoft confirmed some “globally focused Skype” roles were at risk along with those at another of its businesses, Yammer.

Microsoft told the Guardian the decision will enable the Redmond, Wash.-based tech giant to “unify some engineering positions” and consolidate all of it’s London-based 
employees in a single office in Paddington in central London.

Microsoft plans to cut 2,850 jobs worldwide in fiscal 2017.

Skype’s Ongoing Transformation

Skype was a British company before Microsoft bought it for $8.5 billion in 2011. 

Given the ongoing development of Skype and Microsoft’s stated ambitions in the VoIP space, the announcement is a surprise, especially given that there was no indication of anything remiss in the UK office.

However, the job losses are likely more about the shifting role of Skype than business or staff problems. In 2014, Microsoft merged Skype, which had hundreds of millions of users on the back of its P2P calling abilities, with Lync to create Skype for Business.

Skype for Business came with a new client experience, a new server release and updates to the service in Office 365.

“We believe that Skype for Business will again transform the way people communicate by giving organizations reach to hundreds of millions of Skype users outside the walls of their business,” Gurdeep Pall, corporate vice president for Skype at the time.

Does Skype Need to Evolve?

Skype found its place as a business tool. However, the enterprise world is changing again and Skype needs to change with it.

Everyone is doing VoIP, even Slack might be getting into after the acquisition of Screenhero in January 2015, and the launch of voice calls in February this year.

There are persistent albeit unconfirmed rumors that Microsoft is developing a Slack killer using Skype.

The new service is said to be called Skype Teams and will offer group chat capabilities. It is also said to be in test mode internally in Microsoft and enables users chat by video in private or in groups. Even WhatsApp is now offering free international VoIP calls.