Microsoft Corp plans to cut thousands of jobs in some roles. The cut-off is expected to be in the engineering division and human resources. This news would be the latest layoffs in the U.S. tech sector where big companies like Meta Platforms and Amazon.com have announced retrenchment as a response to slowing demands and a worsening economy. This news indicates that the technology sector may continue to reduce jobs.
Morning analyst Dan Romanoff stated, “From a big picture perspective, another pending round of layoffs at Microsoft suggests the environment is not improving and continues to worsen.” Another U.K. broadcaster reported that Microsoft is about to cut 5% of the workforce which is estimated to be about 11000. Bloomberg News said that Microsoft will cut jobs from the engineering division. Whereas another resource said that the company could cut recruiting staff by one-third. Microsoft declined to make any kind of comments on the reports.
Microsoft Corp had 221,000 full-time employees (122,000 in the US and 99000 globally). The company is facing pressure to maintain the growth rates at Azure after facing a downturn in the PC market. If the 5% cutoff (11,000 employees) is accurate then it would be equal to jobs elimination at Meta last year. Microsoft seems to face a similar situation. The company gained good profits in the first two years of the pandemic. It tried to increase its capital by hiring 50,000 employees at that time. But in a past October report, Microsoft CEO Satya Nadella warned about a reduction in spending due to poor macroeconomic conditions.
Recently, CEO Satya Nadella publicly posted a memo saying the company plans to cut 10,000 jobs in the third fiscal quarter. This move is to align the cost structure with demand and revenue. The company is cutting jobs to slash expenses as the sales shrink. Microsoft customers boosted sales during the peak of the pandemic but now the sales are scaling back. Nadella added that the company will continue to hire in key strategic areas. Microsoft is taking on a $1.2 billion restructuring cost, and other unspecified charges for its hardware lineup. Microsoft CEO also stated that the US staff will get above-market severance pay along with six months of healthcare coverage and stock awards.
This will be the second-largest layoff in the history of Microsoft as the company cut 18,000 jobs in 2014. Microsoft is not the only company that is shredding jobs as the Meta cutoff is 11,000 employees meanwhile Amazon expects to face a drop of over 18,000 jobs in the retail and recruiting division.