Microsoft confirms 10,000 job cuts in memo to staff
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Microsoft has confirmed that it is making a large round of layoffs, with 10,000 employees set to lose their jobs.
Rumours of the job cuts circulated over night but now the big tech giant has confirmed the move in a memo sent to staff. The cuts come as the company looks to “align our cost structure with our revenue and where we see customer demand,” Microsoft CEO Satya Nadella said in the memo sent to Microsoft employees.
“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,” he added.
The figure represents just under five percent of Microsoft’s total headcount of over 222,000 staff. Some employees will be told that they’ll be losing their jobs today, with the remaining redundancies being made by March.
The memo points towards “times of significant change”, parts of the world being in recession and the rise of new technologies as some of the reasons for the redundancies.
“These decisions are difficult, but necessary. They are especially difficult because they impact people and people’s lives – our colleagues and friends,” said Nadella.
The memo also reveals that Microsoft is taking a $1.2 billion charge in Q2 related to severance costs, changes to its hardware portfolio, and the cost of lease consolidation as it attempts to create” higher density” across workspaces.
Microsoft says it will offer “full support” to employees who are being laid off, providing severance pay, six months of healthcare coverage, help with career transition and 60 days of notice period, whether or not it’s legally required.
“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.
“Thank you for the focus, dedication, and resilience you demonstrate for Microsoft and our customers and partners each day,” he concluded.
Sky News reported on the potential job cuts earlier today.
Microsoft’s job cuts follows cuts at Amazon, which announced 18,000 job cuts this month, and Salesforce, which cut 8,000 roles. Both companies had hired aggressively in the early stages of the pandemic. Facebook parent Meta also slashed 11,000 roles in November — its first ever reductions since Facebook launched in 2004. And Twitter under Elon Musk has cut its workforce by over 3,000, representing half of its former headcount.
Microsoft Cloud and Azure has been among Microsoft’s top-performing business unit in recent years, consistently seeing around 30% growth in revenues. However, Windows revenues have been hit by a strong US dollar and shrinking PC sales as consumers and businesses tighten their belts amid high inflation. Windows OEM revenues declined 15% last quarter.
Thanks to ChatGPT capturing the world’s attention, one bright spot for Microsoft is its $1bn investment in OpenAI, which has translated into the now generally available Azure OpenAI Service. Microsoft will offer ChatGPT to customers in addition to access to GPT-3.5, Codex, and DALL•E 2.
Microsoft is reportedly in talks to take a $10bn stake in OpenAI, which would give it a 49% share of the research and development company valued at $29 billion.
The 10,000 jobs at risk at Microsoft aren’t its biggest cuts. In July 2014, when it had a headcount of 130,000, the company cut its workforce by 18,000, of which 12,500 were from the Nokia devices team.