Microsoft is cutting 10,000 jobs, almost 5 percent of its total workforce, joining other tech companies scaling back their pandemic-era expansions and takes a $1.2bn charge as its cloud-computing customers cut back spending.
Announced on Wednesday the job layoffs are larger than cuts by Microsoft last year, piled on tens of thousands of job cuts across the technology sector that is long past its ceaseless growth during the recent global pandemic.
Microsoft said in a US regulatory filing that the layoffs were a response to “macroeconomic conditions and changing customer priorities.”
Despite the fact that the Microsoft is increasing its investment into the new promising area of generative artificial intelligence, the information has still been reported.
Following the outbreak of the pandemic, Microsoft’s staff size increased by approximately 36 percent in two fiscal years. This was from 163,000 employees at the end of June 2020 to 221,000 in June 2022.
In an email to employees, CEO Satya Nadella said the layoffs represent “less than 5 percent of our total employee base, with some notifications happening today,”
“While we are eliminating roles in some areas, we will continue to hire in key strategic areas,” Nadella said.
He also emphasized the importance of building a “new computer platform” using advances in artificial intelligence.
“Customers that were accelerating their spending on digital technology during the pandemic are now trying to “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,” said Nadella
This week Nadella touted AI to global leaders gathered in Davos, Switzerland for the World Economic Forum, claiming the technology would transform its products and touch people around the globe.
Microsoft is considering investing more money into OpenAI, the company responsible for the widely-used chatbot ChatGPT, which Microsoft intends to make available on its cloud computing platform.
The software giants announcement of layoffs occurred at the same time that Amazon.com Inc disclosed it would inform 18,000 of its personnel that they would be let go.
The layoffs in the technology industry demonstrate a wider level of financial restraint. According to Challenger, Gray & Christmas, in 2022 the number of job cuts in the sector reached 97,000, the highest since 2002 when the figure was 131,294.
11,000 jobs were eliminated at Meta Platforms Inc, the owner of Facebook, extending the range of job cuts beyond enterprise IT to include the areas of advertising and the consumer web.
Other tech companies have also been scaling back jobs amid concerns about a global economic slowdown including HP announcing last year it’s plans to cut between 4,000 and 6,000 tech jobs by the end of 2025, making it one of the latest global tech firms to announce workforce cutbacks
In July 2022 Microsoft said a small position had been eliminated, while news site Axios in October reported that the company had laid off fewer than 1,000 employees across several divisions.
The technology giant has also been dealing with a decrease in the demand of personal computers after the surge in sales due to the pandemic subsided, leaving little requirement for its Windows operating system and its related programs.
Microsoft’s cloud revenues skyrocketed in recent years
Microsoft’s cloud-based income skyrocketed in the past few years due to an increase in enterprise interest in placing data on the web and managing computing in the cloud. However, expansion fell to 35 percent during the first fiscal quarter of 2023 and the firm predicts further decreases in the future.
The global pandemic boom fueled by the increase in remote work
Like many other tech organizations, Microsoft experienced a surge in its business during the outbreak of the virus, owing to the rise in telecommuting and other web-based activities.
Between June 2021 and June 2022 Microsoft’s workforce grew by approximately 40,000 when it reported having about 221,000 full-time employees, including 99,000 outside the US.
More than 1,000 other tech companies laid off a total of 154,336 employees in 2022 alone,