UPDATE: Microsoft announces plans to lay off 10,000

Software giant, Microsoft, has confirmed in a regulatory filing with the U.S Securities and Exchange Commission (SEC) that it will cut 10,000 jobs across its operations.

The company explained that the layoff was part of a series of actions it plans to take “in response to macroeconomic conditions and changing customer priorities. 

The company further noted that the layoff exercise will be completed by the end of the third fiscal quarter of 2023.

Necessary action: Providing the context to the planned layoffs, Microsoft’s Chief Executive Officer, Satya Nadella, said:  

  • This is the context in which we as a company must strive to deliver results on an ongoing basis while investing in our long-term opportunity. I’m confident that Microsoft will emerge from this stronger and more competitive, but it requires us to take actions grounded in three priorities.  
  • First, we will align our cost structure with our revenue and where we see customer demand. Today, we are making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3. This represents less than 5 percent of our total employee base, with some notifications happening today. 
  • “It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas. 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. 

Cost of actions: Explaining what the actions will cost the company in terms of severance packages to the affected workers, Microsoft said:   

  • Collectively these actions will result in a charge of $1.2 billion in the second quarter of our 2023 fiscal year, representing a $0.12 negative impact to diluted earnings per share. 

In addition, Microsoft also announced changes to its hardware portfolio, and lease consolidation to create higher density across our workspaces. 

In case you missed it: NewsTimes earlier reported that several media reports quoted sources familiar with the matter to have confirmed the impending layoffs. The 11, 000 job cut represents 5% of the company’s 221,000 workforces. But in its official announcement, Microsoft said the layoffs will only affect 10, 000 workers which is less than 5%.

Unending layoffs in tech: While industry analysts had predicted the wave of layoffs that started last year may not end until mid-2023, the scale has been getting higher since the beginning of this year.  Earlier this year, Salesforce announced plans to cut off 10% of its workforce, which will affect over 7,000 workers in the company. A few days later, Amazon also came out with its plans to lay off 18,000 people as a result of uncertainties in the economy.   

  • Facebook parent Meta had last year announced 11,000 job cuts, the largest in the company’s history. Before that, Twitter had laid off almost half of its workforce as Elon Musk took over the ownership of the social media company.  
  • Meta’s CEO, Mark Zuckerberg as well as Salesforce’s Marc Benioff, have blamed themselves for over-hiring early on in the pandemic and misreading how a surge in demand for their products would cool once Covid-19 restrictions eased. 

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