Microsoft plans to lay off 10,000 employees. The reason would be to reduce costs during times of economic uncertainty. In addition, they want to refocus on their strategic priorities such as artificial intelligence.
The move comes in response to an increasingly bleak outlook for the biggest companies in the tech sector. Microsoft sees many of its customers becoming more cautious as parts of the world slide into recession. Industry peers like Amazon, Meta and Twitter have also announced thousands of job cuts in recent months. Microsoft had previously limited itself to minor interventions
The company employed around 221,000 people at the end of June, so the cuts amount to less than 5 percent of the global workforce. “These are the tough decisions we’re making to stay at the forefront of this brutal industry,” Microsoft’s Satya Nadella said in an email to employees.
The layoffs are the largest in about eight years. Nadella cut about 25,000 jobs over the course of 2014 and 2015 when Microsoft dropped its failed acquisition of cellphone maker Nokia.
Like other tech companies, Microsoft expanded rapidly during the pandemic. As of 2019, the company has hired more than 75,000 people and is benefiting from the proliferation of online services. Microsoft’s annual revenue grew 58 percent in three years, but rising interest rates and the possibility of a recession have dampened the company’s prospects. In the quarter through October, Microsoft reported its slowest growth in five years and warned that more lukewarm results could follow.
The changes, including severance payments and other restructuring costs, will cost $1.2 billion, Nadella said. Microsoft will announce its quarterly results on Tuesday. The company has made several expensive investments, including investments in OpenAI, which creates the popular ChatGPT artificial intelligence system.
Other tech giants have also reduced their costs after several years of rapid expansion. Amazon is expected to begin a major round of layoffs on Wednesday as part of its plans to shed about 18,000 jobs from its workforce.
Source : HLN