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Microsoft to Lay off 10,000 Workers

Business

Microsoft Building | Image by The Art of Pics/Shutterstock

Microsoft is laying off 10,000 members of its workforce, according to a statement from the tech giant.

The company had initially onboarded 50,000 employees during the onset of the COVID-19 pandemic, a move largely due to an increased demand for products from customers studying and working from home. Now, as Microsoft CEO Satya Nadella explained in the statement, those same customers are doing “more with less” and product demand has decreased.

Digital sales are important for the tech company, whose leaders permanently closed their stores at physical locations across the nation in 2020, including those in shopping centers located in Frisco and Dallas, according to The Dallas Morning News. A few high-profile locations, like the Microsoft Experience Center in New York City, remained open.

Describing the lay-offs as a move to focus on Microsoft’s “long-term opportunity,” Nadella said that they will account for less than 5% of the company’s overall workforce. Ultimately, the CEO explained that the cuts are “difficult, but necessary” in order to align the company’s cost structure with revenue and customer demand.

“It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas,” Nadella explained. “The senior leadership team and I are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible.”

Nadella said that the company will be taking a $1.2 billion charge in Q2 for severance costs, changes to its hardware portfolio, and lease consolidation. He also said that employees would be notified 60 days prior to their termination and would receive benefits such as above-market severance pay, career transition services, continued healthcare coverage for six months, and vesting of stock awards for six months.

The CEO also said that the next major wave of computing will be with artificial intelligence and that the company was turning the most advanced models into a new computing platform.

These workforce cuts will occur over the course of the third quarter of 2023.

Microsoft is not the only company slimming down its workforce due to economic concerns.

Amazon will also be cutting its own workforce by 18,000, as CEO Andy Jassy announced on January 4. The majority of these job eliminations will be made in Amazon Stores and People, Experience, and Technology teams. Salesforce and Google have also announced substantial cuts to their workforces in recent weeks.

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