A laid-off Oracle cloud developer says there's been a power struggle between Oracle's Seattle and Silicon Valley offices — and Seattle won (ORCL)

Larry Ellison

Business Insider has learned more details about Oracle's layoffs happening this month, from someone who was laid off last week.
This person was a developer on Oracle's cloud.
It's unusual for a company to cut the people building bet-the-business products.
But there's been a power struggle between two groups inside Oracle, this person said.
And these layoffs may actually be a good thing for the company.

Oracle is laying off staff this month and, although the company rarely gives details on them, layoffs at Oracle happen with regularity. Oracle has reported restructuring costs in its financials for years (including 2013, 2015, 2016, 2017 and 2018.)

But this most recent layoff is different in who Oracle is targeting: people working on its cloud.

Although Oracle has confirmed that layoffs are taking place, it hasn't publicly said how many jobs will be cut or how long the cuts will continue. Some sources expect the cuts to continue until the end of Oracle's fiscal fourth quarter in May.

One person Business Insider talked to heard from his manager that 1,500 people worldwide were cut last week. The Register was told by others that the cuts could be bigger once they are completed, and total many thousands globally. Oracle employs 140,000.

Read: Oracle customers fear its reaction if they use Amazon's or Microsoft's cloud, survey shows

Oracle campus tour 42 Oracle has so far only publicly disclosed that it cut 352 people at its Silicon Valley offices last week, according to forms filed with the state of California. However, sources tell us that more people worldwide are impacted.

Beyond the number of people affected, these layoffs are significant because developers who worked on Oracle's cloud products are not being spared or automatically reassigned to other groups.

Cloud is the all-consuming direction of the company. And it's unusual for a company to cut the people building the bet-the-business products.

One person who was let go as part of the layoff told Business Insider that there's actually been two groups of developers working on two versions of cloud over the past couple of years. One is led by the teams in Seattle and works on what's known inside the company as Oracle Cloud Infrastructure (OCI). The other is led by the teams in Silicon Valley and works on what's known as Oracle Cloud Infrastructure Classic (OCIC).

And in the power struggle between the two factions, the Seattle group has won, this person said. "Oracle took over a company in Seattle and they started a parallel development group. And it's obvious that group got the political clout and, presumably, the technical clout. They started to dominate the direction cloud development is going. And a bunch of projects in the original cloud development were canned or put on support only," this person described.

Like 'IBM in the 1990's'

The Seattle team's projects became Oracle's Gen 2 cloud , which was announced in the fall and is now at the center of the company's business strategy.

This person was working on an OCIC project that got cancelled. He lost his job but he believes that ultimately, these cuts, layoffs and the Seattle group's growing power are actually good for the company.

That's because Seattle has become a worldwide hub for cloud engineering talent, as it is home of two of the world's biggest cloud players: Amazon with its cloud Amazon Web Services and Microsoft with its cloud, Azure.

oracle He also says that Oracle has fat to cut because it has grown its engineering team largely through acquisitions over the years. That has bogged engineers down with middle management and bureaucracy.

"They have a ton of mid-level managers, to me they are mainly clueless. Maybe that's my cynicism but that’s why I’m not that negative about what Oracle is doing. Maybe that group in Seattle are the ones that have their game together," this person said.

Having different teams working on separate software projects may have worked in the old, legacy software world, where software was a package of different products and features and new versions happened only every couple of years. But the cloud business is all about speed. Cloud companies like Amazon, Microsoft and Google release dozens to hundreds of new features for their clouds every quarter.

"Oracle got into the cloud game really late and it's always been a game of catch up and because they are so inefficient, it's never really achieved what they thought it was going to achieve," this developer said.

Oracle has "taken over a number of companies but that doesn't necessarily mean they have a ton of good software in the cloud space. The problem with Oracle is that it's so darn large, with so many developers, it feels like IBM in the 1990's. It's a super tanker moving in an unfortunate direction."

A good thing for Oracle?

Others tell Business Insider that the refrain within the company is now about growth with efficiency. That will involve pouring more resources into the cloud services that are already selling well and controlling costs.

Oracle had been ramping up its presence in Seattle since 2015. As of 2017, it had 300,000 square feet of office space leased, GeekWire reported, enough room for 1,500 to 2,000 people.

It is unclear if Oracle has cut anyone from its Seattle location with these layoffs. Oracle has not disclosed any cuts to the state of Washington, where state law requires a layoff disclosure only if 100 people or more lose their jobs.

Oracle While Oracle is known to offer fair severance, some people have also complained about the method Oracle used to inform people about losing their jobs this time around. Some people learned their positions had been cut via text message, according to one person we talked to.

Oracle declined to comment on questions involving its engineering teams or they layoffs other than confirming that layoffs are happening.

"As our cloud business grows, we will continually balance our resources and restructure our development group to help ensure we have the right people delivering the best cloud products to our customers around the world," the Oracle spokeswoman Deborah Hellinger told Business Insider.

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