Microsoft has been hit by the technology industry’s wave of layoffs: The industry heavyweight software company revealed significant job layoffs. By the end of March, Microsoft expects to let go of about 10,000 people. As the US group noted on Wednesday, that amounts to fewer than 5% of the workforce.

The layoffs were anticipated by US media, so they are hardly a surprise. In the company blog, Microsoft CEO Satya Nadella defended the layoffs as a cost-cutting tactic, saying, “We have to bring our cost structure into line with our sales.”

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However, Nadella emphasized that recruiting and investment in areas of crucial strategic importance would also be made up for the job cuts. Microsoft is increasingly concentrating on the cloud industry with network services under his direction.

Nadella did not say explicitly which departments would be affected by the job cutbacks. He assured the impacted workers that management would handle the layoffs as “considerately and transparently” as feasible. He noted that these choices are “tough yet necessary.” In the fall, Microsoft already made employment cuts. The workforce increased by a significant sixth to 221,000 employees by the middle of the previous fiscal year in 2022.

Terminations result in substantial expenses for Microsoft.

Even though the layoffs and severance payments are meant to save money in the long run, Microsoft will initially bear the cost of them. The company disclosed that the necessary notification to the US Securities and Exchange Commission will result in balance sheet constraints of 1.2 billion dollars as a result of the group’s layoffs and other restructuring measures (1.1 billion euros). On January 24, Microsoft plans to release its financial results for the most recent second quarter of business.

The layoffs at the Windows division serve as yet another illustration of how quickly the job boom in the tech sector came to an end. After experiencing a boom during the epidemic, many enterprises are struggling in the present market situation, which is defined by worries about inflation and recession. The Nasdaq index dropped by 33% last year, which indicates that tech stocks are particularly under pressure on the stock market.

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The IT industries are under increasing pressure to reduce expenses as a result of the bad economy, in part due to the loss of revenue from advertising. According to analyst Dan Ives, “several of these companies spent money like rock stars did in the 1980s.” In light of the worsening economic climate, they now need to reduce their spending.

The list of businesses making layoff announcements has recently gotten longer and longer. For instance, there were layoffs at Twitter, which Elon Musk, the CEO of Tesla, took over, as well as at Facebook, Whatsapp, and Instagram parent company Meta.

In the fall, Meta let off 11,000 workers, or around 13% of the workforce. As a cost-cutting move, Musk announced on Twitter that about half of the 7,000 jobs had been eliminated. Then more workers departed. Amazon, the biggest online retailer in the world, stated at the beginning of the year that 18,000 of its roughly 1.5 million employees will be laid go. Salesforce, a rival to SAP, is laying off around 8,000 employees, or one-tenth of its staff.

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