Microsoft has confirmed in a filing with the Securities and Exchange Commission (SEC) that it plans to lay off approximately 10,000 employees by the end of the third fiscal quarter of 2023.
This represents less than 5% of the total employee base of over 220,000. Speaking on these new changes, Satya Nadella, the CEO of Microsoft, said,
Today, we are making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3. This represents less than 5 percent of our total employee base, with some notifications happening today.
Satya Nadella, the CEO of Microsoft
He further said that despite this tough decision, the company would continue to hire in critical strategic areas.
This is not the first time the company is cutting down on its workforce. During the layoff season last year, Microsoft underwent a smaller round of layoffs, cutting down more than 1,000 employees from its workforce.
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Microsoft’s plan
Like every other tech company that has terminated staff appointments over the last year, Microsoft has explained that its plans for 2023 are to align its cost structure with its revenue and customer demand.
Also, according to Satya, the company is looking to allocate its capital and talents to “areas of secular growth and long-term competitiveness for the company”. The company is also looking to change its hardware portfolio and the cost of lease consolidation as they create higher density across its workspaces.
The affected employees will be notified 60 days before their terminations. Microsoft plans to provide and support them in their transition period. US-benefit-eligible employees will receive benefits packages including above-market severance pay, 6 months of health insurance, career transition services, and continued vesting of stock awards for six months.
For employees outside the US, their benefits will be aligned with the employment laws of their countries.
According to the statement, Satya, the CEO said,
We will treat our people with dignity and respect, and act transparently. These decisions are difficult but necessary. They are especially difficult because they impact people and people’s lives—our colleagues and friends. We are committed to ensuring all those whose roles are eliminated have our full support during these transitions.
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Layoffs in the tech space continue
Just when we thought we had seen it all with the never-ending layoffs that happened in 2022. This layoff fever has spilt over to this year, with many companies continuing from where they stopped in 2022.
At the start of the year, Salesforce announced it would lay off approximately 10% of its employees, i.e. around 8,000 workers, based on the company’s most recent reported headcount.
Anjali Sud, CEO of Venmo, also announced the decision to reduce the size of our team by 11% in a message to the Venmo team on January 4th.
Just a few days after, Amazon announced its own plan to cut down its workforce, bringing it to a total of 18,000 affected employees. Coinbase also cut down its 1000 employees from its workforce earlier this week.
It is unclear what the rest of the year will hold for other tech companies but with the economy still in recession, more companies might succumb to this strategy sooner or later.
Read Also: Venture Capital funding in crypto startups declined by 75% in Q4 2022
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