Microsoft to trim workforce by 10,000 amid economic slowdown

Microsoft to cut 10000 jobs as spending slows

Microsoft will eliminate 10,000 positions in the most recent round of layoffs to affect the tech sector.

Up to 5% of its global staff could be impacted, and the corporation could incur severance and reorganization costs of $1.2 billion (£972 million).

While consumer spending increased during Covid, according to Microsoft CEO Satya Nadella, more individuals are now “exercising caution.”

He declared that the company would keep hiring in crucial sectors.

Microsoft announces plans to cut 10,000 jobs as spending slows
Job losses at Microsoft as company looks to reduce spending

In a note to the workforce, Mr Nadella broke the news by stating that while many regions of the world were experiencing or were about to experience a recession, “at the same time, the next great wave of computing is being born, with developments in AI.”

According to the Financial Times, Microsoft is considering making a multibillion-dollar investment in ChatGPT (Generative Pre-trained Transformer) developer OpenAI.

Microsoft to cut 10000 jobs as spending slows

Analysis Author: Zoe Kleinman

The next round of huge tech layoffs didn’t take very long to come about.

Corporations are trying to tighten their belts after the boom period of the epidemic when lockdowns meant people were locked at home and wanted to spend their money on digital entertainment and electronics. Microsoft is the first, but it won’t be the last.

But that doesn’t mean the market is stagnant; according to sources, Microsoft is thinking about investing $10 billion in the maker of ChatGPT, the chatbot that has captured the attention of millions of users and is considered by some experts to be the search engine of the future.

Because of its search engine, Bing, Microsoft is aware that it just needs a small portion of that market to be extremely profitable.

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Not to mention its proposed acquisition of gaming behemoth Activision Blizzard, which would add a whole new portfolio of well-known video game franchises to its repertoire.

The hundreds of employees who will be let go in the first few months of 2023, however, will find little comfort in this.

In recent weeks, hundreds of digital companies have announced layoffs, including some of the largest names in the industry, like Amazon and Instagram owner Meta.

Due to “the uncertain economy” and its hasty recruiting during the pandemic, Amazon said at the beginning of this year that it would be eliminating more than 18,000 employees.

Meta said in November that it would lay off 11,000 workers, or 13% of its workforce.

Jason Wong, a tech industry analyst with the consulting firm Gartner, cautioned against assuming that layoffs at large social media companies like Facebook and Twitter occurred for the same reasons as those at “enterprise” companies like Microsoft and Amazon, some of which had encountered additional difficulties due to “where they intend to take the business.”

He cited Twitter’s transition to “a model away from pure advertising” and Facebook’s pursuit of the metaverse as examples.

Pandemic surge

Microsoft’s company grew during the epidemic, similar to that of other computer firms, thanks to the rise in remote work and other internet activity.

Between June 2021 and June 2022, when it reported having over 221,000 full-time employees, including 99,000 outside the US, its employment increased by about 40,000.

The company started making a number of job losses last year when business slowed down.

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It’s anticipated that the most recent 10,000 will be finished by the end of the third quarter of 2023.

According to the memo, certain employees would be informed right away.

“Treat our people with dignity and respect, and act transparently,” Mr Nadella pledged.

According to the redundancy tracking website, more than 1,000 tech companies fired 154,336 workers in 2022 alone.

The website claims that 26,061 people working in the computer sector have already lost their jobs this year, including the most recent Microsoft layoffs.

According to experts, there is still a need for job seekers with the appropriate abilities, especially engineers with experience in AI and data science.

However, employment attorney Kevin Poulter of the legal company Freeths issues a warning that “workers affected by these changes may struggle to acquire alternative work in light of comparable reductions recently disclosed throughout Meta, Amazon, Salesforce, and across the larger tech sector.”

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