Microsoft has joined a wave of other tech companies in announcing mass layoffs, cutting around five percent of its overall workforce.
A securities filing last week noted that they would be laying off 10,000 employees as part of a range of measures aimed at cutting costs in the wake of economic uncertainty.
Ahead of the layoff announcement, Microsoft CEO Satya Nadella said the company had been affected by the weaker global economy in comments made at the World Economic Forum in Switzerland. He said: “No one can defy gravity, and gravity here is inflation-adjusted economic growth.”
Nadella said in a memo to staffers that changing demand for digital services as the pandemic subsides and fears of a recession have also played a role, noting: “As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less. We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.”
A U.S. Securities and Exchange Commission filing from last June stated that Microsoft had roughly 221,000 full-time employees around the world, around 122,000 of which were based in the U.S. The 10,000 employees who are being cut are expected to lose their jobs sometime before the end of March, with some affected employees already being informed that their services are no longer needed. The company will also be taking a $1.2 billion charge.
Microsoft is just one of many companies that has been feeling the pinch lately. Earlier this month, Google announced it would be laying off 12,000 individuals from its workforce, with CEO Sundar Pichai noting that layoffs in the U.S. would come immediately and would later be followed by layoffs in other countries. Employees there had feared the move was coming given the trend at other tech companies as well as changes in the company’s performance rating system.
Amazon recently announced plans to lay off 18,000 workers in what will be the company’s biggest workforce reduction in its 28-year history. Their workforce had climbed from 798,000 during 2019’s fourth quarter to 1.6 million by the end of 2021. Likewise, Salesforce recently announced that it would be cutting 10 percent of its workforce.
Meanwhile, the parent company of Facebook, Meta, announced that it would be slashing 11,000 jobs in the biggest layoffs in the history of the company. This amounts to 13 percent of the company’s staff. Disappointing guidance in 2022’s fourth quarter saw one fourth of its market cap wiped out and sent its stock to its lowest level since 2016. Facebook reportedly increased its head count by roughly 60 percent during the pandemic but has been suffering as a result of competition from rivals like TikTok, slowdowns in spending on online ads and other factors.
When Elon Musk took over Twitter this past October, roughly 3,700 employees were cut, which amounts to around half of the company’s staff. In November, he tweeted that he was left with “no choice” due to the company’s losses of $4 million per day.
Some tech CEOs, including Marc Benioff of Salesforce and Mark Zuckerberg of Meta, have taken the blame, saying that they over-hired in the early days of the pandemic and failed to predict how that demand would change as virus-related restrictions eased.
Statistics show that the tech sector has been hit especially hard compared to the overall labor market. For example, a report by Challenger, Gray and Christmas found that tech layoffs rose 649 percent in 2022 over the year before, while job cuts in the overall economy rose just 13 percent to during the same time.
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