Microsoft will eliminate 10,000 jobs as part of the latest round in staff redundancies.
It could affect as many as 5% of the company’s global workforce. The business will be forced to pay $1.2bn (PS972m), in reorganisation and severance costs.
Satya Nadella, chief executive of Microsoft, stated that although customer spending has increased during Covid’s time, people are now more inclined to “exercise caution”.
He stated that the firm would continue to recruit in key areas.
In a memo to his staff, Mr Nadella stated that many areas of the world were experiencing recession, or anticipating one. However, “at the same moment, the next major wave in computing is being birth, with advances in AI.”
According to the Financial Times, Microsoft is looking at a multi-billion-dollar investment into artificial intelligence company OpenAI (the maker of ChatGPT) according to the Financial Times.
We didn’t have long to wait for the next round in layoffs at big tech.
Microsoft is not the first, but it will be the most, as the giants try to tighten their belts after the boom period of the pandemic. This was when people were locked out and forced to stay at home. They wanted to spend their money on digital entertainment.
However, this doesn’t mean the sector is stagnating. Microsoft is reportedly considering a $10 billion investment in ChatGPT, the company behind Chatbot. Experts believe Chatbot will be the future of search.
Microsoft has proven through its search engine Bing that it only requires a small portion of the market to be very profitable.
Let’s not forget about the proposed acquisition by Activision Blizzard of gaming giant Activision Blizzard. This would give it a new collection of highly-profile games titles.
This is a small comfort for the many staff who will be losing their jobs in the first days of 2023.
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In recent weeks, layoffs have been announced by hundreds of tech companies, including some of the biggest names in the sector like Meta and Amazon.
Amazon stated that it would be cutting more than 18,000 jobs due to “the uncertain economic environment” and rapid hiring during pandemics.
Meta announced in November that it would reduce 13% of its workforce to 11,000 employees.
Jason Wong, a Gartner tech industry analyst, cautioned against the assumption that redundancies in “enterprise” businesses like Amazon and Microsoft were due to the same reasons as those made by large social media companies. Some of these firms have faced additional challenges due to “where they plan to take the company”.
Twitter was a case in point. He said that Twitter was moving away from pure advertising and pointed to Facebook’s pursuit of the metaverse.
Microsoft, like other tech companies, saw its business flourish during the pandemic. This was due to the rise in remote work and other online activities.
Between June 2021, 2022 and June 2022, its workforce grew by approximately 40,000. In June 2022, it reported that it had about 221,000 employees full-time, 99,000 of which were from outside the US.
The firm began a series job cuts last year as business slowed.
The last 10,000 are expected to be complete by the end the third quarter in 2023.
According to the memo, some employees would be notified as soon as possible.
Mr Nadella said he would “treat our people dignity, respect and act transparently.”
According to Layoffs.fyi, which tracks redundancies, more than 1,000 tech companies have laid off 154 336 employees in 2022 alone.
According to the site, 26,061 employees in the tech sector have been laid off this year, despite the recent losses at Microsoft.
Experts believe there is still demand to find job candidates with the right skillsets, especially engineers who are skilled in AI and data science.
Kevin Poulter, an employment attorney at Freeths warns that “employees who are affected by these cuts might struggle to secure other work in light of similar reductions already made across Meta, Amazon and Salesforce as well as across the wider tech sector”.