Microsoft is cutting 10,000 employees, about 5% of its workforce, joining other tech companies that have scaled back their pandemic-era expansion.
The company said in a regulatory filing on Wednesday that the layoffs were a response to changing macroeconomic conditions and customer preferences.
The company said it will also revamp its hardware portfolio and strengthen its leased office spaces. Microsoft is cutting far fewer jobs than it had added during the COVID-19 pandemic as it responded to a boom in demand for its workplace software and cloud computing services with so many people working and studying from home. Microsoft’s workforce expanded by about 36% in the two fiscal years following the emergence of the pandemic, growing from 163,000 workers at the end of June 2020, to 221,000 in June 2022.
The layoffs represent “less than 5 percent of our total employee base, with some notifications happening today,” CEO Satya Nadella said in an email to employees.
“While we are eliminating roles in some areas, we will continue to hire in key strategic areas,” Nadella said. He emphasized the importance of building a new computer platform using advances in artificial intelligence.
He said 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,” Nadella wrote.
Other tech companies have also been trimming jobs amid concerns about an economic slowdown. Amazon and business software maker Salesforce earlier this month announced major job cuts as they prune payrolls that rapidly expanded during the pandemic lockdown.
Amazon said that it will be cutting about 18,000 positions. It’s the largest set of layoffs in the Seattle company’s history, although just a fraction of its 1.5 million global workforces. Facebook parent Meta is laying off 11,000 people, about 13% of its workforce. And Elon Musk, the new Twitter CEO, has slashed the company’s workforce.
Nadella made no direct mention of the layoffs on Wednesday when he put in an appearance at the World Economic Forum’s annual meeting happening this week in Davos, Switzerland. Asked by forum founder Klaus Schwab what tech layoffs mean for the industry’s business model, Nadella said companies that boomed during the COVID-19 pandemic are now seeing a normalization of that demand.
“Quite frankly, we in the tech industry will also have to get efficient, right?” Nadella said. “It’s not about everyone else doing more with less. We will have to do more with less. So we will have to show our productivity gains with our sort of technology.”
Microsoft did not immediately respond to questions about the focus on the layoffs and office closures. As of June, it had 122,000 employees in the US and 99,000 elsewhere.