Microsoft is laying off 10,000 employees

Microsoft CEO Satya Nadella speaks at the company’s Ignite Spotlight event in Seoul on November 15, 2022.

Seung Joon Cho | bloomberg | Getty Images

Microsoft On Wednesday, it said it had laid off 10,000 employees through March 31 as the software maker prepares for slower revenue growth. The company also charges $1.2 billion in fees.

the alphabetAnd Amazon And sales force It is among the technology companies that have cut staff in recent weeks. The downturn follows an increase in demand for cloud computing and collaboration services as businesses, government agencies and schools encourage remote working to reduce exposure to Covid.

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Rising prices have prompted companies to become more cautious about spending on technology, hurting the prospects for technology stocks that have outperformed other market segments year after year. Now Microsoft and its peers are making an assessment. In July, Microsoft said it would cut less than 1% of employees, and in October confirmed an additional round of job cuts that reportedly affected fewer than 1,000 workers.

“I am confident that Microsoft will come out of this stronger and more competitive,” CEO Satya Nadella told employees in a note posted on Microsoft’s website. He wrote that the move would reduce Microsoft’s headcount by less than 5%, and some employees will find out this week if they lose their jobs.

Shares of Microsoft rose slightly at the US open after the announcement.

U.S. employees who qualify for benefits will receive above-market severance pay, Medicare, and stock benefit for six months. Nadella wrote that and 60 days notice before the termination of their employment.

Nadella echoed the trends in the business climate he described in recent months.

“As we’ve seen customers accelerate their digital spending during the pandemic, we’re now seeing them optimize their digital spending to do more with less,” he wrote. “We’re also seeing organizations in every industry and every geography being cautious because some parts of the world are in a recession and other parts are expecting that to happen.”

Earlier this month, Nadella indicated that the company may have to make adjustments.

“I think for us as a global company, we’re not going to be immune to what happens in the macro,” he said in an interview with CNBC-TV18. “We’ll also have to get our own kind of operational focus to make sure that our expenses are in line with our revenue growth.”

Microsoft called for revenue growth of 2% in the fiscal second quarter, the slowest rate since 2016.

Big layoffs aren’t an annual exercise for the 47-year-old Microsoft, but they do happen occasionally. In 2017, Microsoft laid off thousands of employees in a massive reorganization of its sales unit. In 2014, after acquiring Nokia’s hardware and services business, Microsoft cut 18,000 people.

Nadella writes that the fees relate to termination of service, changes to the company’s equipment lineup, and the cost of standard leases.

“Everyone of us and every team in the company must raise the bar and outperform the competition to deliver meaningful innovation that customers, communities and countries can truly benefit from,” Nadella writes. “If we achieve this, we will emerge stronger and thrive long into the future; it’s that simple.”

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