By Emmanuel Nduka
Tech firm, Microsoft has concluded plans to lay off up to 10,000 employees as part of broader cost-cutting measures.
This was disclosed by the company in a securities filing on Wednesday, making it the latest tech company to reduce staff because of growing economic uncertainty.
Microsoft CEO, Satya Nadella speaking just before the layoff announcement at the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, said the company was not immune to a weaker global economy.
“No one can defy gravity and gravity here is inflation-adjusted economic growth,” he told WEF founder Klaus Schwab in a livestreamed discussion.
As contained in a memo to staffers Wednesday, Nadella also cited changing demand years for digital services years into the pandemic as well as looming recession fears.
“We’re living through times of significant change, and as I meet with customers and partners, a few things are clear.
“First, as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less,” he added.
As of June 30, 2022, Microsoft had approximately 221,000 full-time employees globally according to a US Securities and Exchange Commission filing, with some 122,000 of those staffers based in the United States.
Nadella added that the job the cuts represent less than 5% of the company’s total workforce and the reductions will be complete by the end of its fiscal third quarter this year, which ends in March.
He said the company will incur a $1.2 billion charge in its second quarter related to “severance costs, changes to our hardware portfolio, and the cost of lease consolidation.”
“These decisions are difficult, but necessary,” Nadella added.
Microsoft joins other tech companies that have made deep cuts to their workforces since the start of the year, as inflation weighs on consumer spending and rising interest rates squeeze funding.
Just as Amazon (AMZN) announced that it plans to lay off 18,000 people, Salesforce (CRM)said it is cutting 10% of its staff. Facebook (FB) parent Meta also recently announced 11,000 job cuts, the largest in the company’s history. In October, Axios reported that Microsoft had laid off under 1,000 employees across several divisions.
Microsoft will announce second quarter earnings on January 24. The software company’s Azure cloud computing business drove revenue growth over the three months through September, as sales in its personal computing division decreased slightly.
The planned layoff comes amid rumors of a significant investment from Microsoft into OpenAI, the firm behind the AI chatbot, ChatGPT.
