Microsoft on Wednesday became the latest addition in a growing list of big tech companies laying off employees over concerns about the economy and hiring too many workers during the pandemic.
The company plans to lay off 10,000 employees, Microsoft chief executive Satya Nadella said Wednesday, to cut costs amid economic uncertainty and refocus on strategic priorities like artificial intelligence.
Microsoft busy about 221,000 workers As of late June, the cuts amount to less than 5 percent of its global workforce.
With the cuts, Microsoft is the latest tech giant to step down after a few years of frenetic hiring as the pandemic-driven surge in online services and the expansion of cloud computing created stiff competition for tech talent.
Microsoft and its competitors have responded to booming customer demand and the race for talent by hoarding essentially technical staff. “The reality is that you can adjust settings very quickly, and that’s what’s happening,” said Brad Reback, an analyst at investment bank Stifel. “I don’t think this is symptomatic of a larger problem. That is more in the sense of normalization.”
Many tech companies are still making more money than executives in other industries could dream of. In the most recent quarter, Microsoft had sales of $50 billion, which brought in a profit of $17.6 billion.
Microsoft’s share price fell more than 1 percent on Wednesday morning.
Mr Nadella said in a message to employees that the layoffs “are the kind of tough decisions we’ve made in our 47-year history to remain a consistent company in this industry that is unforgiving of anyone who doesn’t conform to platform changes.” adjusts.”
The layoffs, which begin Wednesday and last through March, are the company’s largest in about eight years. Mr Nadella cut around 25,000 jobs over the course of 2014 and 2015 when Microsoft abandoned its ill-fated acquisition of mobile phone maker Nokia.
Like other tech companies, Microsoft expanded rapidly during the pandemic, hiring more than 75,000 employees since 2019. Microsoft’s annual revenue has grown 58 percent in three years, but rising interest rates and the prospect of a recession have clouded the company’s prospects. In the quarter ended October, it reported the slowest growth in five years and warned that more lukewarm results could follow.
Customers strive to “do more with less,” said Mr. Nadella. “We are also seeing companies across all industries and geographies exercising caution as some parts of the world are in recession and other parts are anticipating a recession,” he added.
The changes, including severance payments and other restructuring costs, will cost $1.2 billion, Mr Nadella said. In a regulation submission, Microsoft said that part of the cost would come from the consolidation of office leases as well as “changes to our hardware portfolio.” Microsoft makes the Surface line of laptops and tablets, and demand for PCs has fallen sharply since the pandemic highs, when businesses and families bought laptops to work and study from home.
In October, the company’s chief financial officer, Amy Hood, told investors that the slowdown in consumer PC sales that began in September will continue through at least June.
Microsoft is expected to announce its quarterly results on Tuesday.
Mr Nadella said the company will continue to hire in strategic areas, calling advances in artificial intelligence “the next great wave of computing”.
The company has tracked several expensive bets, including potential putts another $10 billion in its investment in OpenAI, which makes the explosively popular artificial intelligence system ChatGPT, and a $69 billion acquisition of video game maker Activision faced with challenges from antitrust authorities worldwide.
Other tech giants have also cut costs after several years of breakneck expansion. Amazon began what is expected to be a large round of layoffs Wednesday as part of its plans to cut the company’s workforce by about 18,000 jobs.
“Exiting Covid over the past year has been challenging,” wrote Doug Harrington, who heads Amazon’s retail and operations business, in a note to employees Wednesday morning obtained by the New York Times.
He added that while the company has reduced costs, “we have identified that we need to take additional steps to improve our cost structure so that we can continue to invest in the customer experience that draws customers to Amazon and grows our business.” .”
The enterprise software company Foreclosure said this month that it plans to lay off 10 percent of its workforce, or about 8,000 employees, and Meta, the parent company of Facebookannounced late last year that it would cut more than 11,000 jobs.
