Microsoft is laying off 10,000 employees as part of a restructuring effort. This amounts to 5% of the company’s strength. The layoffs, expected to take place over the next few months, come amid a tech industry downturn marked by a 33% drop in the Nasdaq last year. This has brought job cuts across the sector, including at large firms like Amazon and Facebook-parent Meta.
According to a memo from Microsoft CEO Satya Nadella, the layoffs are a result of customers optimizing their digital spending to “do more with less.” Nadella also cited caution being exercised by organizations in every industry and geography as some parts of the world are in a recession, and others are anticipating one.
This is not the first time Microsoft has gone through a round of layoffs; in October, the company cut 1,000 jobs. However, the current round of layoffs is expected to be one of the largest in the company’s history.
As per Microsoft, the changes to the hardware portfolio and the consolidation of real estate holdings would result in a $1.2 billion charge.
Microsoft has been investing heavily in its Azure cloud platform, which competes with Amazon Web Services and Google Cloud. The company has also been expanding its enterprise market reach with its Office 365 and Dynamics 365 products.
With 221,000 employees worldwide, the layoffs will have a significant impact on the company and its workers.
It’s worth noting that these layoffs come as Microsoft reported record revenue of $143.015 billion, an increase of 17% YoY, and an operating income of $51.04 billion, an increase of 33% YoY.