Microsoft Confirms It Will Axe 10,000 Jobs

Microsoft has confirmed media reports and said it will begin laying off thousands of jobs across its organisation.

In a memo to the workforce, CEO Satya Nadella confirmed the job loss reports, and said the tech giant will axe roughly 5 percent of staff or 10,000 jobs.

The confirmation means Microsoft joins a wave of tech firms such as HP, Meta, Amazon, Salesforce, Twitter etc in making large scale workforce reductions amid a worsening global economy.

Job losses

“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,” noted Nadella in his memo.

“We’re also seeing organisations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one,” he said, and then added that Microsoft must “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,” said Nadella. “This represents less than 5 percent 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,” he wrote. “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 also added that Microsoft will take 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.”

“I want to extend my deepest thanks and gratitude to everyone who has contributed to Microsoft up to this point and to all of you who will continue to contribute as we chart our path ahead,” said Nadella.

The job cuts come as Microsoft looks to add to its $1-billion stake in OpenAI, the startup behind the Silicon Valley chatbot known as ChatGPT, which Microsoft plans to soon market through its cloud service.

Recent cuts

It should be noted that Microsoft has already made a number of job cuts during 2022.

In May 2022 a senior Microsoft executive warned the management of the Windows and Office divisions to adopt a more conservative approach to hiring new people.

Then in early July 2022 Microsoft cut less than 1 percent of jobs as part of an annual structural adjustment, which it said was routinely carried out every summer.

Later that same month Microsoft began withdrawing job openings in its Azure and security divisions, as its hiring slowdown extended to other divisions.

Then in October Microsoft confirmed a second round of job losses (reportedly under 1,000 jobs) across multiple divisions but did not confirm actual numbers let go.

Microsoft at the time blamed weaker sales of Windows licenses for PCs, as the economy weakened and PC shipments continued to fall.

Outplacement firm Challenger, Gray & Christmas has said that in 2022 more than 97,000 job cuts in the tech sector had been announced, the highest for the sector since 2002, when 131,000 cuts were announced.

“We haven’t seen this activity since the dot-com bust,” Andrew Challenger, the company’s senior vice president was quoted by Reuters as saying.