Microsoft plans to cut 10,000 jobs this year and wants to bet more on artificial intelligence. With this, the American software giant confirms the rumors that were already circulating earlier this week.
Due to the layoff of 10,000 people, just under 5 percent of the approximately 220,000 staff would have to leave. The maker of the Windows operating system already warned in October that cloud activities are not going as well as in recent years. “We have to make these kinds of difficult choices to adapt to changing circumstances,” CEO Satya Nadella told staff on Wednesday.
According to Microsoft, the round of layoffs should reduce costs in times of economic uncertainty. The company is seeing many of its customers becoming more cautious as parts of the world enter recession. Microsoft is following the example of other American tech giants who have laid off thousands of employees in recent months. Amazon will lose 18,000 jobs. Meta, Facebook’s parent company, cut 11,000 jobs and as the new owner of Twitter, Elon Musk fired half of its staff. Software manufacturer Salesforce announced that it wanted to continue with 8,000 fewer people.
CEO Satya Nadella van Microsoft. — © Getty Images
Microsoft had so far limited itself to smaller interventions. CEO Satya Nadella estimates the costs of the restructuring and severance payments at about $ 1.2 billion, writes the American newspaper New York Times. This reduces earnings per share by 12 cents.
“We will have to do more with less”
Earlier in the day, before the announcement of the layoffs, Nadella had indicated in an interview at the World Economic Forum in Davos that the technology sector is going through a period of slowdown. “We will have to do more with less. We will have to show our own production gains with our own technology.”
Nadella also stressed that Microsoft will continue to recruit for key strategic divisions. The layoffs would mainly affect HR and engineering positions. It is the largest restructuring at Microsoft in eight years, after the company cut about 25,000 jobs in 2014 and 2015. The most recent rounds of layoffs at the tech company were in July and October of 2022. Then mainly vacancies were withdrawn and a recruitment freeze was introduced.
The announcement comes ahead of the presentation of the latest quarterly figures on January 24. Microsoft is expected to report a 2 percent increase in revenue for its second quarter. That would be the smallest growth in six years. The share price of Microsoft showed little movement on Wednesday after the round of layoffs was confirmed.