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Microsoft is cutting 10,000 employees, almost 5% of its workforce, joining other tech companies that have scaled back during the pandemic.
The company said in a regulatory filing on Wednesday that the layoffs were in response to “changing macroeconomic conditions and customer priorities.”
The Redmond, Wash.-based software giant said it would also make changes to its hardware portfolio, consolidating its leasing office locations.
Microsoft added far less than it added during the COVID-19 pandemic as it responded to a surge in demand for workplace software and cloud computing services at a time when so many people were working and studying from home. We are reducing staff.
“A large part of this is over-hiring,” said Joshua White, a professor at Vanderbilt University.
Microsoft’s workforce has grown approximately 36% in the two fiscal years since the outbreak of the pandemic, from 163,000 at the end of June 2020 to 221,000 in June 2022.
Chief Executive Officer Satya Nadella said in an email to employees that the layoffs are “less than 5% of the total employee base and several notices have been made today.”
Nadella said, “We are reducing our roles in some areas, but we will continue to hire in key strategic areas. He will use advances in artificial intelligence to build a ‘new computer platform.’ emphasized the importance of
Customers who had accelerated their spending on digital technology during the pandemic are now looking to “optimize their digital spending to do more with less,” he said.
“We also know that organizations in all industries and regions are paying attention because some parts of the world are in recession and others are anticipating it,” Nadella said. rice field.
Fears of a slowing economy have also cut jobs at other tech companies.
Amazon and business software maker Salesforce earlier this month announced drastic job cuts to cut labor costs that ballooned during pandemic lockdowns.
Amazon said it would cut about 18,000 positions and began notifying affected employees in the United States, Canada and Costa Rica on Wednesday, with other regions to follow, according to an email from an executive. The layoffs that have begun are the largest set of layoffs in the Seattle company’s history, but only a fraction of its global workforce of 1.5 million.
Also on Wednesday, UK-based cybersecurity firm Sophos confirmed that it laid off 10% of its global workforce (450 employees) on Tuesday. Known for threat intelligence and detection, Sophos was acquired by private-his-equity firm Thomas Bravo for her $3.9 billion in 2020.
Facebook’s parent company Meta is laying off 11,000 people, about 13% of its workforce. Twitter’s new CEO, Elon Musk, has also significantly cut the company’s workforce.
Nadella didn’t directly mention the layoffs Wednesday when he attended the World Economic Forum’s annual meeting in Davos, Switzerland, this week.
When Forum founder Klaus Schwab was asked about what tech layoffs mean for the industry’s business model, Nadella said companies that boomed during the COVID-19 pandemic are now He said he was seeing a “normalization” of that demand.
“Frankly, we in the tech industry need to be efficient too, right?” Nadella said. “It’s not that everyone else will do more with less. We need to do more with less. So we need to show productivity gains with our own technology.” I have.”
Microsoft declined to answer questions about where the job cuts and office closures would be concentrated. announced that it would cut 878 employees.
As of June, there are 122,000 employees in the US and 99,000 in the rest of the world.
Vanderbilt professor White said while all industries are looking to cut costs ahead of a possible recession, tech companies could be particularly sensitive to a rapid rise in interest rates.Inflation fight with.
“This hits tech companies a little harder than it does industrial and consumer staples, as most of Microsoft’s value is in projects whose cash flow has gone unrewarded for years,” he said.
One recent high-profile project is Microsoft’s investment in San Francisco startup partner OpenAI. OpenAI is the maker of the writing tool ChatGPT and other AI systems that can generate readable text, images and computer code.
Microsoft, which owns the Xbox gaming business, also faces regulatory uncertainty in the U.S. and Europe with its $68.7 billion acquisition of video game company Activision Blizzard, which had about 9,800 employees a year ago. We are behind schedule.
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