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Microsoft exempts Azure from hiring freeze to capitalize demand surge – Business Insider Nordic


Microsoft confirmed a broad hiring freeze, but the company will maintain recruiting for several strategic areas including its Azure cloud business, according to Business Insider.

US Tech Titans' Cloud Revenue Growth Rates



Business Insider Intelligence


Big tech companies like Microsoft are well-positioned to maintain operations through quarantine, particularly when compared with harder-hit industries like hospitality and retail, as their corporate workforces have largely transitioned to working remotely. Microsoft’s hiring freeze, then,  speaks to broader economic uncertainty surrounding the coronavirus pandemic, as consumers and enterprises alike anticipate spending cuts to weather the crisis.

Continued hiring for Azure will help Microsoft address peak demand for cloud services, which forced the company to impose temporary restrictions on its customers. Cloudflare CEO Matthew Prince estimated that, because of the pandemic, cloud services have had to accommodate a sustained 50% increase in utilization, per The Wall Street Journal.

This has been driven by enterprise and consumer behavioral changes: Over the course of March, T-Mobile’s network experienced a 60% increase in mobile hotspot usage, an 87% increase in online collaboration tools, and an 85% increase in video game traffic. For Microsoft to accommodate the rise in cloud services demand, it had to place “a few temporary restrictions” on Azure customers. Cloud providers including Azure face a challenge akin to building a plane in the air — they need to quickly expand cloud capacity while still ensuring a quality experience for the surge in new end-users. 

Though the quarantine measures driving peak demand will eventually let up, big tech companies are jockeying to capture a long-term growth opportunity. The growth of US tech titans’ cloud revenue has slowed in recent quarters: Microsoft Azure reported 62% year-over-year (YoY) growth in Q4 2019 compared with 76% a year prior, and Amazon Web Services reported 34% YoY growth in Q4 2019 compared with 45% a year prior.

Attempts by big tech to attract new users to their cloud-based services — Microsoft, Google, and Zoom have all given away free workplace software — speak to the fact that they view quarantine as a catalyst for long-term changes in user behavior, and therefore a source for lasting relationships with new customers.

Big cloud players are vying to capture the lion’s share of near-term growth, which would provide considerable momentum to retain new customers for years to come. We expect these three big cloud players to see an increase in growth rate over Q1 and Q2 of 2020, which will then slow in accordance with the downward pressure on growth that comes with scale.

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