Microsoft plans to lay off 10,000 employees as part of broader cost-cutting measures, the company said in a securities filing Wednesday, citing heightened economic uncertainty. has become the latest technology company to reduce
Ahead of the layoff announcement at the World Economic Forum (WEF) in Davos, Switzerland on Wednesday, Microsoft CEO Satya Nadella said the company was not affected by the weakening global economy. .
“No one can defy gravity, and gravity is inflation-adjusted economic growth here,” he told WEF founder Klaus Schwab in a livestreamed discussion.
In a note to staff on Wednesday, Nadella also noted the changing demand age for digital services in the years following the pandemic, as well as fears of a looming recession.
“We are living in a time of great change. Meeting with our customers and partners reveals a few things,” he wrote. “First, as we saw our customers accelerate their digital spending during the pandemic, they are now optimizing their digital spending to do more with less. I see the
As of June 30, 2022, Microsoft has approximately 221,000 full-time employees worldwide, of whom approximately 122,000 are based in the United States, according to filings with the U.S. Securities and Exchange Commission. I’m here.
Nadella said the layoffs represent less than 5% of the company’s total workforce and will be completed by the end of the third quarter of this year’s fiscal year, which ends in March.
The company said it will incur charges of $1.2 billion in the second quarter related to “severance, hardware portfolio changes, and lease consolidation costs.”
“These decisions are difficult, but necessary,” wrote Nadella.
Several tech companies have slashed headcount since the beginning of the year as inflation weighs on consumer spending and rising interest rates weigh on funding. Demand for digital services during the pandemic has also waned as people return to living offline.
Amazon (AMZN) announced plans to lay off 18,000 people, and Salesforce announced it would cut 10% of its workforce. Meta, the parent company of Facebook (FB), also recently announced 11,000 job cuts, the largest in the company’s history. In October, Axios reported that Microsoft laid off less than 1,000 of her employees across multiple divisions.
Tech CEOs from Meta’s Mark Zuckerberg to Salesforce’s Marc Benioff overhire early in the pandemic and wonder how the surge in demand for their products will cool once Covid-19 restrictions are eased. I’ve been blaming myself for misreading.
While the overall labor market remains tight, tech layoffs are increasing at a staggering pace. A recent report from outplacement firm Challenger, Gray & Christmas found that tech layoffs in 2022 were up 649% year-over-year, while job cuts across the economy increased by just 13% over the same period. I was.
Microsoft will announce its second quarter earnings on January 24th. The software company’s Azure cloud computing business led revenue growth in the three months to September as sales in its personal computing division declined slightly.
Although Microsoft has made significant cuts, Nadella said the company will continue to invest in “strategic areas for the future,” pointing to advances in AI as the “next big wave” of computing. bottom. His letter to employees comes amid rumors that Microsoft is investing heavily in his OpenAI, the company behind his AI chatbot ChatGPT.