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A Closer Look at Oracle’s Job Cuts in China

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Oracle is shutting down its development operation in China

Oracle (ORCL) is planning on eliminating more than 900 jobs in China, according to media reports. The layoffs in China are expected to mostly affect Oracle’s R&D (research and development) teams in the country. Oracle operates five R&D facilities across China.

To some, the planned retrenchment of hundreds of R&D personnel in China is viewed as part of a preparation by Oracle to eventually shut down its product development operation in China.

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Oracle is rebalancing its resources as cloud takes center stage

Without confirming or denying reports about its plan to lay off hundreds of workers in China, Oracle told CNBC that rebalancing its resources and restructuring its R&D teams have become necessary as it builds out its cloud business. According to data from Synergy Research, Oracle has fallen behind its business software peers, such as Microsoft (MSFT) and IBM (IBM), in the cloud-computing market, which could be why the company is attempting the radical reorganization of its development groups as it seeks to catch up.

The global cloud market is projected to reach $214.3 billion in revenue this year from $182.4 billion in 2018, according to Gartner estimates.

Revenue fell in the latest quarter

Oracle’s revenue fell 1.0% YoY (year-over-year) to $9.6 billion in its third quarter of fiscal 2019, which ended in February. Revenue rose 14% YoY at Microsoft but fell 4.7% YoY at IBM in the first quarter. Oracle’s other cloud competitors Alphabet (GOOGL) and Amazon (AMZN) recorded revenue rises of 17% YoY each in the quarter.

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