Microsoft is cutting 10,000 jobs, or about 5% of its workforce. to join other technology companies have reduced their expansion during the pandemic.
The company said in a regulatory filing on Wednesday that the layoffs were in response to “macroeconomic conditions and changing customer priorities.”
The Redmond, Washington-based software giant also said it will make changes to its hardware portfolio and consolidate office space it leases.
Microsoft is cutting fewer jobs than it has added during the COVID-19 pandemic demand boom for workplace software and cloud computing services for many people who work and study from home.
“A big part of it is overzealous hiring,” said Joshua White, a finance professor at Vanderbilt University.
Microsoft’s workforce expanded nearly 36% in the two fiscal years since the pandemic emerged, from 163,000 employees at the end of June 2020 to 221,000 employees in June 2022.
CEO Satya Nadella said in an email to employees that the layoffs “combined with some of the announcements today represent less than 5 percent of our total employee base.”
“While we will eliminate roles in some areas, we will continue to hire in key strategic areas,” Nadella said. I emphasized the importance of building a “new computing platform” using the advances of artificial intelligence.
He said customers who accelerated their spending on digital technology during the pandemic are now trying to “optimize their digital spending to do more with less.”
“We’re seeing organizations in every industry and geography exercise caution as some parts of the world are in recession and other parts are anticipating a recession,” Nadella wrote.
There have been other technology companies as well cutting work amid concerns about an economic slowdown.
Amazon and business software maker Salesforce announced major job cuts earlier this month as they cut payrolls that have been expanding rapidly during the pandemic lockdown.
Amazon said it would cut about 18,000 jobs and began notifying affected workers in the United States, Canada and Costa Rica, according to emails from executives. The job cuts, which began in November, are just a fraction of a global workforce of 1.5 million, but are the largest set of layoffs in the Seattle-based company’s history.
Also on Wednesday, U.K.-based cybersecurity firm Sophos confirmed that it was laying off 10% of its global workforce — 450 employees — on Tuesday. Sophos, known for threat intelligence and detection, was acquired by private equity firm Thoma Bravo in 2020 for $3.9 billion.
Facebook parent Meta is laying off 11,000 people, about 13% of its workforce. And Twitter’s new CEO, Elon Musk, has cut the company’s workforce.
Nadella did not directly address the layoffs when he spoke on the floor Wednesday Annual meeting of the World Economic Forum It’s happening this week in Davos, Switzerland.
Asked by forum founder Klaus Schwab what the tech cuts mean for the industry’s business model, Nadella said companies that thrived during the COVID-19 pandemic are now seeing a “normalization” of that demand.
“Obviously, we have to be efficient in the tech industry too, right?” Nadella said. “It’s not about everyone doing more with less. We will have to do more with less. Thus, we will have to show our productivity with our own technology.”
Microsoft declined to answer questions about where the layoffs and office closings would be concentrated. The company notified Washington state employment officials Wednesday that it is laying off 878 workers at offices in Redmond and nearby Bellevue and Issaquah.
As of June, it had 122,000 employees in the United States and 99,000 elsewhere.
White, the Vanderbilt professor, said all industries are trying to cut costs ahead of a possible recession, but technology companies could be particularly vulnerable to a rapid rise in interest rates. is a used tool The Federal Reserve has been aggressive in its fight against inflation in recent months.
“It hits tech companies a little harder than industrial or consumer staples, because a large part of Microsoft’s value is in cash-flow projects that won’t pay off for several years,” he said.
Recent notable projects include Microsoft’s investment in San Francisco startup partner OpenAI. writing tool ChatGPT and other AI systems that can generate readable text, images, and computer code.
Microsoft, which owns the Xbox gaming business, is also struggling regulatory uncertainty The video game company, which had about 9,800 employees in the United States and Europe a year ago, postponed a planned $68.7 billion acquisition of Activision Blizzard.
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AP Business Writers Kelvin Chan in London and Frank Bajak in Boston contributed to this story.
