“Wall Street Journal” reported that Microsoft announced on the 18th that due to the impact of the global economic recession, it plans to lay off 10,000 employees, and the affected manpower accounted for no more than 5%. The scale of this wave of layoffs will be Microsoft’s largest wave since 2014.
Chief executive Satya Nadella said the layoffs will be implemented by the end of March this year (2023). In a blog post to employees, Nadella noted the current faltering economy, telling employees that as some parts of the world are facing recession and others are expected to, businesses around the world are starting to Take precautionary measures.
In Nadella’s message to employees, he did not specify which parts of the company will be reduced in manpower. Nadella said that Microsoft will reduce manpower in some areas, but will continue to recruit new employees in strategic areas.
Microsoft has laid off employees several times in the past (2022), but has not announced the exact number of layoffs. One of those times was in July last year, when Microsoft said the number of employees affected was no more than 1% of the company’s total workforce.
The last time Microsoft cut jobs of this magnitude was in 2014, when about 18,000 employees lost their jobs as the company exited cellphones and other non-core businesses.
According to Microsoft’s fiscal quarterly report that ended at the end of June last year, the company had a total of 221,000 employees at the time. This figure represents an increase of 22% compared to 2021.
In recent months, many technology giants have begun to lay off employees due to factors such as economic recession fears, high inflation and interest rate hikes. Reuters reported that both Amazon and Meta announced layoff plans long before Microsoft. The news of Microsoft’s layoffs reflects the likely continued reduction in job openings in the technology industry.
Dan Romanoff (Dan Romanoff), an analyst at Morningstar, an American investment research institution, pointed out, “In the big picture, the layoff plan launched by Microsoft this time means that the technology industry environment has not improved yet, and may continue to deteriorate.”
The New York Times reported that Microsoft’s annual revenue has grown 58 percent over the past three years, and its workforce has increased by 75,000. However, high interest rates and expectations of a recession have weighed on the company’s outlook. Microsoft’s latest quarterly financial report showed the slowest growth rate in nearly five years, and Microsoft also warned that this situation may continue.
Microsoft’s stock price fell 2% at the close on the 18th, and it was down 22% for the whole of last year, but this performance is still better than other technology companies.
The New York Times pointed out that the slowdown in the growth of the technology industry has a deeper impact on companies that are smaller or focus on new products such as cryptocurrencies. But the tech giants are not immune. Business software company Salesforce also announced this month that it would lay off 10 percent of the company’s workforce, or about 8,000 people. Facebook’s parent company, Meta, announced late last year that it was laying off more than 11,000 people. Amazon also announced on the 18th that it will lay off 18,000 employees.