Microsoft to Slash 10,000 Employees Amid Worldwide Economic Worries

Microsoft has announced that it would be cutting off 10,000 people, making it the latest tech giant to do so as the global economy continues to draw concern.

Anticipated Layoffs

On Wednesday, Jan. 18, CEO Satya Nadella informed staff through a blog post that less than 5% of the company's worldwide workforce will be affected by layoffs, the Wall Street Journal reported (WSJ).

As per Nadella's email, businesses across the globe have started to practice prudence as certain parts of the world are in a recession, and other parts are expecting one because of the slowing economy.

He also said the company would write down $1.2 billion in severance charges from its next earnings report.

Nadella did not indicate in his email to staff which departments would be affected by the reductions. He said there would be some layoffs, but hiring would continue in key sectors.

Microsoft experienced many layoffs last year but did not disclose how many employees were affected. When one cycle began in July 2022, the corporation stated it hit fewer than 1% of its more than 200,000 employee workforce.

Hiring Surge

With firms investing in growth and competing for talent by providing competitive salaries, the IT industry has been on a hiring binge for years. Since the start of Covid-19, businesses have been recruiting at a breakneck speed to meet the surging demand.

Microsoft is one of several software firms that has significantly increased its workforce in recent years. After its fiscal year in June 2022, the company said it had 221,000 workers. Compared to the previous year, it was an increase of 22%.

Constant Layoffs

As the business environment has worsened in recent months due to worries about an economic downturn, high inflation rates, increasing interest rates, and other issues, several tech corporations have shifted to eliminating thousands of employees.

Layoffs.fyi, a website that keeps tabs on these occurrences estimated that IT companies slashed more than 150,000 workers last year. The momentum of this bandwagon seems to be keeping up.

In recent news, Amazon said that it would be terminating 18,000 jobs. For the first time in the company's history, business software giant Salesforce said this month that it would be laying off 8,000 workers, or 10% of its worldwide staff.

In a Tuesday announcement on Jan. 17, Unity Software claimed it would be firing 284 people. The software company that helps people create games and other apps announced layoffs last June, affecting around 225 people.

This decision by Microsoft comes a week before the company is slated to reveal its financial results for the previous quarter.

Microsoft Redmond in Washington reported slowing growth late last year due to a combination of factors, including falling PC sales and a strong currency. From July through September 2022, revenue increased 11% year over year, the slowest gain in over five years.