Microsoft is set to cut 10,000 jobs amid slowing global growth, in the latest round of layoffs, the company announced on Wednesday. The layoff will impact up to 5 per cent of Microsoft’s global workforce and cost the business $1.2 billion in severance and reorganisation costs.
The job cuts at Microsoft come after technology companies like Amazon.com and Meta announced retrenchment exercises in response to slowing demand and a declining global economic outlook.
According to Microsoft CEO Satya Nadella, the tech giant is looking to align its cost structure with projected revenues and where customer demand remained the strongest.
“First, we will align our cost structure with our revenue and where we see customer demand. Today, we are making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3. This represents less than 5 per cent of our total employee base, with some notifications happening today. It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas. We know this is a challenging time for each person impacted. The senior leadership team and I are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible,” Nadella wrote in a blog post.
The software giant is also seeking to allocate its capital and talent to areas of secular growth and long-term competitiveness for Microsoft.
“Second, we will continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company, while divesting in other areas. These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts. As such, we are taking a $1.2 billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces,” Nadella noted.
As of June 30, the tech giant had 221,000 full-time employees, out of which 122,000 are in the US, according to news agency Bloomberg.
With the downturn of personal computers which hurt the company, Microsoft is now under pressure to maintain growth rates at its cloud unit Azure. A small number of roles were eliminated last year when Microsoft laid off about 1,000 employees across several divisions.