Microsoft logo on a Cologne building

Microsoft announces 10,000 layoffs

Image credit: Pixabay

Microsoft plans to cut 10,000 jobs – around 5 per cent of its global workforce – in the latest round of redundancies to hit the tech industry.

Microsoft chief executive Satya Nadella confirmed the company's plans to reduce its workforce during the global economic slowdown, following similar action taken by Meta and Amazon. 

Microsoft, which employs more than 220,000 people worldwide, including 6,000 in the UK, will lay off 10,000 employees by the end of September 2023.

The company will also spend $1.2bn (£972m) in severance and reorganisation costs.

In the announcement, Nadella blamed changing customer behaviours following the Covid-19 pandemic. He stressed that while customer spending had grown during Covid, more people and companies were now choosing to "exercise caution" when faced with a looming recession. 

“We’re now seeing them optimise their digital spend to do more with less,” he said. “We will align our cost structure with our revenue and where we see customer demand."

Microsoft's business boomed during the pandemic, fuelled by the increase in remote work and other online activities. Between June 2021 and July 2022, the company's workforce grew by roughly 40,000 people. 

In October last year, Microsoft warned of a slowdown in its cloud computing business, acknowledging that it would have to re-evaluate spending in response to economic challenges.

The company has not specified which divisions or brands within Microsoft will be affected by the layoffs.

However, Nadella stressed its intention to invest in "strategic areas", and pointed to artificial intelligence creating the “next major wave of computing” as an example of the ”significant change” the company is facing.

Microsoft is an investor in OpenAI, the company behind the ChatGPT (Generative Pre-trained Transformer) chatbot that has been making headlines due to its smart capabilities. 

The latest jobs news follows reports that Microsoft had cut fewer than 1,000 employees across several divisions during 2022, but today's figure constitutes a sharp departure from that figure.

Staff eligible for US benefits who are being laid off will be offered a redundancy package including “above-market severance pay; continuing healthcare coverage for six months; continued vesting of stock awards for six months; career transition services, and 60 days’ notice prior to termination”, according to the company.

The firm said that impacted staff outside the US will have benefits that “align with the employment laws in each country”.

Microsoft has around 6,000 workers and six main offices in the UK: its Reading headquarters and additional sites in Cambridge, Edinburgh, Enfield, Manchester and Paddington.

“We know this is a challenging time for each person impacted," Nadella said. “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.”

With this news, the company joins hundreds of other technology players that have recently opted to reduce their workforce due to market concerns. 

Earlier this month, Amazon confirmed reports that the company is planning to lay off 18,000 employees in what would be the largest job cuts in the company’s history. Shortly after, Salesforce, the cloud software provider, announced it would cut 8,000 jobs. 

Last November, Meta, the parent company of Facebook, Instagram and WhatsApp, also said it will cut its global workforce by 13 per cent, letting go of more than 11,000 employees.

In the days following Elon Musk’s $44bn acquisition of Twitter, the social media company laid off approximately half its workforce. Lyft, Snap, Stripe and other technology firms have also laid off workers in recent months.

Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.

Recent articles