Microsoft announces up to 10,000 job cuts, to invest in strategic areas to stay competitive

Microsoft CEO Satya Nadella has announced up to 10,000 job cuts, with notices to affected employees starting today. In a memo distributed to staff and posted online, Nadella described economic conditions that force “tough choices” like this, but said Microsoft will continue to invest in “strategic areas” for its future. The total number of employees to be laid off represents less than five percent of Microsoft’s total workforce, according to Nadella. The layoffs were anticipated, with rumors leaking earlier in the day. According to reports, Microsoft had 221,000 employees in June 2022, including 99,000 outside the United States. Other big tech companies, including Twitter, Amazon and Meta, have also recently laid off large numbers of employees due to a global economic slowdown.

In the company-wide memo, Nadella cited the reduction in consumer spending as the COVID-19 pandemic has become less severe and the fact that many parts of the world are facing an economic recession. . The layoffs are necessary to align cost structures with projected revenues, and Microsoft will continue to hire new resources as needed. Although some affected employees will be notified immediately, the process is not expected to be completed until Q3 2023.

Promising to treat all employees “with dignity and respect” and to act transparently, Nadella pledged to help those made redundant in terms of adequate notice periods, career transition services, continued benefits , above-market severance pay and acquisition of stock options, in accordance with the laws and regulations of the various countries. The cost of severance and consolidation of leased office space is expected to be $1.2 billion this year. It was not immediately clear how many affected employees are in the United States and how many work in other locations.

Even through this process, Microsoft says it will continue to invest its money and people in key strategic areas for future growth, which will likely involve AI. The memo ends with Nadella thanking all Microsoft employees for their dedication and resilience, but includes a warning that everyone must perform better for the company to thrive.