Microsoft announced up to 10,000 job cuts Wednesday, becoming the latest major tech company to reduce staff amid growing economic uncertainty. CEO Satya Nadella wrote in a memo to employees that Microsoft is “seeing organizations in every industry and geography exercise caution.”
The company said workers impacted by the layoffs will receive 60 days’ notice, six months of health care coverage and stock vesting and “above-market severance pay.”
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Microsoft is cutting up to 10,000 jobs worldwide, the latest tech company to announce layoffs as the global economy slows. CEO Satya Nadella said the cuts were aimed at aligning the company’s cost structure with projected revenues and where customer demand is strongest.
The move is part of a wave of tech job cuts that began in 2009 and has increased by more than 649% over the past year, according to outplacement firm Challenger, Gray & Christmas. It follows Amazon’s (AMZN) plans to cut 18,000 workers and Salesforce’s announcement that it’s cutting 10% of its employees.
In a memo to staff, Microsoft CEO Nadella said the cuts were necessary. He cited changing demand years into the pandemic, as well as looming recession fears.
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Microsoft Announces Up to 10000 Job Cuts
The world’s biggest software maker lays off thousands of workers worldwide, taking a $1.2 billion charge that will cut profit by 12 cents a share. The layoffs add to a string of tech companies that have scaled back staffing and real estate expansion to cut costs as economic growth slows.
In a note to employees, CEO Satya Nadella said customers are “trying to do more with less” and he urged a refocus on the cloud computing business where customer demand is strongest.
The company’s cuts come as the economy continues to slow and recession fears rise. They are among the largest technology job cuts since the dot-com bust in 2002.
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Microsoft Announces Up to 10000 Job Cuts
The tech company plans to let go of up to 10000 employees as it prepares for a slower growth period. Chief Executive Satya Nadella cited changing demand for digital services years into the COVID-19 pandemic and looming recession fears in a memo to staff Wednesday.
In the past, Microsoft has conducted large layoff rounds ahead of earnings reports, but this is the largest reduction the company has made in almost eight years.
Among the factors that could impact the company’s decision are severance costs, changes to hardware and its “lease consolidation” efforts.
While these cuts will be significant, they may also provide a chance for Microsoft to focus on areas of growth and reduce its overall costs. These cost-cutting moves, which are likely to affect less than five percent of the company’s workforce, could make the stock a buy-and-hold investment in the near future.
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Microsoft Announces Up to 10000 Job Cuts
Amid a slowing global economy, Microsoft is the latest tech giant to announce job cuts. CEO Satya Nadella told employees Wednesday the company was seeking to align its cost structure with projected revenues and where customer demand remains strongest, according to a memo posted on the firm’s website.
The cuts are larger than Microsoft’s last round of layoffs, which impacted less than one percent of its workforce, and are expected to last until March with notifications beginning this week.
Despite the announcement, Microsoft is still investing in new technologies, including artificial intelligence and machine learning. The firm’s chief technology officer, Satya Nadella, wrote in the memo that Microsoft was looking to “leverage the next major wave of computing” through AI.
Microsoft is the latest big tech company to announce job cuts, following Google parent Alphabet, Amazon, Facebook and Salesforce. The tech industry grew rapidly during the COVID-19 pandemic, but it’s now cooling as companies seek to keep their budgets under control with inflation and interest rates.