Microsoft announces the layoff of 10,000 employees, about 5% of its workforce

Mass layoffs continue to wreak havoc at big tech companies.

This Wednesday it was Microsoft that has joined the wave of workforce adjustments in some giants that fattened their payroll during the pandemic and that have been affected by the slowdown in the economy and the lower growth in demand for their services.

Microsoft has announced a workforce cut of 10,000 jobs, around 5% of its employees.

The company has made its decision public with a message to the staff and a communication to the United States Securities and Exchange Commission (the SEC).

In it, it indicates that the workforce cut will take place during the current fiscal quarter, which ends next March 31, and that the measure is part of a broader plan to reduce expenses.

The message to employees is signed by the company's CEO, Satya Nadella.

“We live in times of significant change, and when I meet with customers and partners, some things are clear.

In the first place, just as we saw customers accelerate their digital spend during the pandemic, now we are seeing them optimize their digital spend to do more with less, ”their letter begins.

Sadella points out that organizations across all industries and geographies are proceeding with caution, as some parts of the world are in recession and others anticipate one.

Tech layoffs gained momentum last year and have continued into 2023. The announcement from the Satya Nadella-led company coincides with the date Amazon is set to notify new employees that they are part of a record 18,000 job cuts launched by the e-commerce and cloud computing giant.

Microsoft is headquartered in Redmond, Washington, just outside Seattle, where Amazon has its headquarters.

As of June 30, 2022, the end of its last fiscal year, Microsoft had the equivalent of 221,000 full-time employees, 122,000 of them in the United States and another 99,000 abroad, according to its annual report.

Those 221,000 people meant for the company an unprecedented increase in workforce of 40,000 people in a single year that the company has choked on.

Of the total number of people employed at Microsoft at the end of its last fiscal year, 85,000 worked in operations, including manufacturing, distribution, product support and consulting services;

73,000 worked in product research and development;

47,000 worked in sales and marketing;

and 16,000 worked in general administration.

The Redmond company plans to present the results of the second quarter of its fiscal year on January 24 and has announced that it will provision 1,200 million dollars for the cost-cutting plan.

In the first, from July to September, it achieved revenues of 50,122 million dollars, with growth of 11%, the lowest in more than five years.

The strength of the dollar subtracted five percentage points from growth, which would have been 16% at constant exchange rates.

But the company experienced a deterioration in margins.

The operating result grew by 6% and net profit fell by 14%, affected by extraordinary items and the foreign exchange impact.

wave of layoffs

The wave of layoffs in technology companies added more than 150,000 jobs last year, according to calculations by the website layoffs.fyi, which computes announcements and news about it.

For many tech companies, the pandemic was a golden age.

The return to normality, strategy errors, excess hiring and the slowdown in the economy have left a hangover of tens of thousands of layoffs in the sector despite the strength of the US labor market, in which the unemployment rate is at the lowest in the last 50 years.

So far in 2023, Amazon announced that it was raising its workforce cut to a total of 18,000 employees, which is just over 1% of its workforce of 1.5 million workers.

Salesforce joined with a cut of approximately 10% of its workforce, which means some 8,000 layoffs, within a restructuring plan to reduce costs and improve operating margins, as reported to the United States Securities and Exchange Commission (the SEC).

In addition to Amazon, among the companies that announced workforce cuts last year is Meta (Facebook), with 11,000 layoffs in part due to losses derived from its failed bid for the metaverse.

Twitter cut its workforce of 7,500 workers in half with the arrival of Elon Musk, followed by a wave of resignations by hundreds of employees.

The Snap social network announced in August the dismissal of 20% of its payroll, more than 1,000 workers, after a slowdown in its growth and multimillion-dollar losses.

Connected stationary bike maker Peloton joined in October with more than 4,000 employees and Netflix with about 500.