Microsoft becomes the latest tech giant to lay off swathes of employees amid broader restructuring in the sector, favoring profitability over growth.
Microsoft CEO Satya Nadella announced that the company would be laying off around 10,000 employees starting Wednesday. The layoffs will be completed by the end of Q3 and represent slightly under 5% of the company’s workforce.
Affected employees will receive “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, regardless of whether such notice is legally required,” says Nadella.
“We’re living through times of significant change, and as I meet with customers and partners, a few things are clear,” begins Nadella’s memo to the company. “First, 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,” he continues. “At the same time, the next major wave of computing is being born with advances in AI, as we’re turning the world’s most advanced models into a new computing platform.”
“It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas,” Nadella explains. “We will continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company while divesting in other areas.”
“As such, we are taking a $1.2B 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 is only the latest tech giant to reduce its workforce. Amazon announced earlier this month that it would be laying off 18,000 employees, while Meta, Snap, Twitter, and Netflix made significant cuts last year.