Microsoft has confirmed that it will shed 10,000 employees as it becomes the latest Silicon Valley giant to confront the economic slowdown and structural shifts in technology.
Some say the cuts across the technology sector follow a return to scale prior to soaring growth during the pandemic.
Amazon has said it is losing 18,000 people, while Facebook and Instagram owner Meta, and Twitter are among those to have announced big job cuts.
In a regulatory filing, Microsoft said it would take a $1.2 billion restructuring charge associated with the layoffs, which said come ‘in response to macroeconomic conditions and changing customer priorities.’
In a memo to employees, CEO Satya Nadella said the layoffs, affecting nearly 5% of the workforce, would begin on Wednesday and conclude by the end of March.
“We’re living through times of significant change,” wrote Nadella, adding that “parts of the world are in a recession and other parts are anticipating one.” He noted that customers wanted to “optimise their digital spend to do more with less.”
He added: “We’re also seeing organisations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.
“At the same time, the next major wave of computing is being born with advances in AI, as we’re turning the world’s most advanced models into a new computing platform.”
In a frank admission that this would impact on thousands of employees he said company had to respond to these changes to remain competitive.
“We will align our cost structure with our revenue and where we see customer demand. 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% of our total employee base, with some notifications happening today. It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas.
“These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts.
“As such, we are taking a $1.2 billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces.”
The company is witnessing a slump in the personal computer market, reducing demand for its Windows and accompanying software.