Monday, January 30, 2023

Microsoft announces it will lay off 10,000 workers

Microsoft announced this Wednesday that it will lay off 10,000 employees, less than 5% of its workforce, and that it has begun to notify some of the layoffs this Wednesday.

The executive president, Satya Nadella, also noted in a statement that the company is going through “significant changes.”

Nadella explained that when she meets with clients, she notices that they are no longer “accelerating their digital spend,” as seen during the pandemic, but instead opting to “optimize their digital spend to do more with less.”

“We are also seeing organizations across industries and geographies tread cautiously as some parts of the world are in a recession and other parts anticipate one,” he adds.

The Microsoft chief executive added that the company will take a $1.2 billion impairment charge on its earnings due to severance costs and changes to its hardware portfolio, among others.

The software company’s revenue growth has slowed in recent quarters. Next Tuesday, Microsoft will announce its latest quarterly results.

Its shares have fallen 23% in the last 12 months, in line with the Nasdaq index – where the main technology companies are listed – which fell 26%. And 45 minutes after the opening of the stock market today, its shares were up a slight 0.25%.

Last July, Microsoft notified a round of layoffs that affected 1% of its workforce, which had a total of around 180,000 employees, as a result of a “strategic readjustment” at the beginning of its new fiscal year.

Since the start of the new year, several tech companies have cut their workforces as the boom fueled by the covid pandemic, which increased the number of employees, now grows fears of a possible economic downturn.

Amazon said this month it planned to lay off more than 18,000 employees – of which 10,000 have already been laid off in 2022 – and last November, Facebook’s parent company Meta said it would cut more than 11,000 workers.

Lyft, Salesforce, DoorDash, Snap, and Twitter were other companies in the sector that announced layoffs in recent months.

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