Why Oracle is hiring 2000 for cloud division after big layoffs
Oracle on Tuesday announced it would be hiring 2,000 people for its cloud business in technical and business-operations roles.
That’s an insignificant number compared with its almost 139,000-strong overall workforce, but there are several strategic reasons why Oracle might want to tout these jobs.
For one thing, Oracle has been undergoing several rounds of layoffs this year, which included cuts in its cloud business units.
So the announcement of its hiring plan helps Oracle show the world that its cloud business is healthy and growing.
One former employee we talked to explained how Oracle has finally this year settled on a smart and winning strategy amid the larger cloud wars, in which Amazon Web Services remains the dominant player.
Hiring 2,000 people is an interesting reason to put out a press release. With a worldwide headcount of nearly 139,000, another 2,000 employees would grow its headcount by less than 1.5% — which is just about its general rate of employee turnover anyway. For instance, Oracle right now lists 8,000 job openings on its site.
But there are several good strategic reasons why Oracle may have made this announcement.
For one, earlier this year, Oracle laid off untold thousands of employees, including the issuing of pink slips to a swatch of technical folks who worked in Seattle on its cloud, Business Insider previously reported. Announcing a new wave of hiring is a way for Oracle to signal to the world that it’s continuing to invest in a healthy cloud business.
Another reason: Chairman and Chief Technology Officer Larry Ellison told investors last month that Oracle was growing its cloud “as fast as we can other than building data centers that are empty.” In other words, Oracle is focusing its cloud growth to respond to customer demand instead of building out huge data centers first and then trying to sign new clients later.
So calling out these 2,000 job openings is way to underscore Ellison’s message last month.
Trim employees there, hire them here
But the news isn’t just public-relations fluff.
The scheme to lay off thousands and then hire back 2,000 people for the cloud is a good, strategic one, one former midlevel manager who left the company during that reorganization last summer told Business Insider.
The layoffs earlier this year came after Thomas Kurian, Oracle’s longtime head of engineering, left for Google Cloud in 2018. Many disparate business groups, working on a variety of different products, were consolidated under Don Johnson, the vice president of Oracle Cloud Infrastructure product development, this person told us.
With Kurian gone, Johnson’s star is now rising at the company. He was even named by Ellison as a contender on the list of internal candidates who may become co-CEO with Safra Catz should Mark Hurd be unable to return from his recent medical leave.
The layoffs, then, were a way to trim the groups working on less-important products and features and for Johnson to get his arms around a sprawling number of cloud-engineering units.
But Oracle’s cloud business was not spared from the layoffs.
We previously reported that, under Kurian, Oracle had created two whole cloud teams building two different clouds — and infighting between them was the norm. The team based in Seattle was building what’s known as the Oracle Gen 2 cloud. And they won the war. The older cloud was phased out, with much of the team developing it targeted for layoffs.
But Seattle’s team lost some further battles under Johnson, and faced layoffs too.
Why not simply transfer these people to some of those 2,000 new jobs? One reason is the cost. Sources told us that Oracle overhired in Seattle and was paying some of this team very high wages — in the middle to high six figures, including stock options, a source said.
As Oracle’s cloud grows, the high Seattle wages and overhead costs were “not sustainable,” the former middle manager said.
A new cloud strategy
More importantly, as Ellison hinted, Oracle has this year settled on a cloud strategy that differs from AWS, Azure, and Google Cloud, and that gives the company a real chance to become an important cloud player for its customers.
Oracle has finally come to terms with the fact that its cloud is many years behind Amazon and the other major players in terms of the number and breadth of features it offers.
The company has now smartly decided to focus on building a cloud specifically optimized for customers of its own on-premises-database and software customers. It wants those customers to move their Oracle apps to Oracle’s cloud, rather than let them be scooped up by AWS, a competitor who is encouraging Oracle customers to ditch Oracle’s software.
To that end, Oracle even partnered with Microsoft Azure, its archrival’s cloud, and began encouraging its customers to use Azure for needs other than Oracle’s apps, making the two clouds work well together.
All of this means that Oracle is choosing locations for its new data centers that are near its most strategic customers, — rather than, as Ellison said, building empty data centers and trying to fill them. So it needs more employees in those specific locations worldwide, rather than a larger group in Seattle.
Beware of the future
The laser focus on its own customers and its own apps is probably the best thing Oracle could do at this stage in the game to stay relevant as cloud computing alters the way companies buy their technology.
But there is one “gotcha,” sources told us: Oracle needs to be keeping an eye on the future and investing heavily in next-generation cloud technologies like machine learning and artificial intelligence, serverless computing, and other new trends.
Over the past few years, Oracle has invested billions more in stock buybacks ($36 billion in its last fiscal year alone) than on R&D spending (about $1.5 billion per quarter last year, according to YCharts).
If Oracle continues to focus more on the needs of today than the tech of tomorrow, it could be just kicking the can down the road as the more advanced clouds like AWS, Azure, and Google look to nab its database customers later on.
Oracle did not respond to our request for comment.