Microsoft plans on laying off 10,000 workers by the third quarter of fiscal 2023.
According to Microsoft CEO Satya Nadella, the cuts represent “less than 5 percent of our total employee base” of roughly 221,000 employees. The company will also continue hiring “in key strategic areas” even as it cuts in others.
“These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts,” Nadella’s note added. “As such, we are taking a $1.2 billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces.”
Microsoft has made deep cuts before. In 2015 and 2016, for example, it laid off thousands of employees as it unwound its disastrous Nokia acquisition. This current round of layoffs stems from businesses and customers cutting back on their digital spending due to fears of a potential recession, impacting Microsoft’s revenue.
But Microsoft isn’t alone in unleashing massive layoffs. During the pandemic, tech giants used boosted revenues to embark on significant hiring sprees; for example, Amazon announced plans in 2021 to hire more than 55,000 tech and corporate workers. However, the current spasm of economic uncertainty has driven tech executives to examine how they can streamline operations and save cash—leading to recent layoff announcements at Salesforce, Meta, Twitter, Amazon, and numerous startups.
Meanwhile, the unemployment rate for tech occupations dipped to 1.8 percent in December, lower than the national unemployment rate of 3.5 percent, according to the latest analysis of U.S. Bureau of Labor Statistics (BLS) data by CompTIA. Despite the high-profile layoffs among some of the biggest companies in tech, it’s clear that organizations of all sizes still need tech professionals to get vital work done.