Microsoft today announced a major downsizing of its work force. The company in a memo through its CEO, Satya Nadella said the company will be “making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3.”
The company currently having more than 220,00 employees, the implication of this round of layoffs will mean about 5 percent of its workers will become unemployed, with the latest cuts significantly larger than the 1 percent cut Microsoft made to its workforce last year.
CEO Nadella in the memo also noted that Microsoft will be taking a $1.2 billion charge in its Q2 earnings that are due next week. According to Nadella, the charge is “related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces.”
The American multinational technology corporation will January 25, 2023, announce its fiscal 2023 quarter earnings, with the cuts and $1.2 billion expected to foreshadow some missed revenue targets in parts of Microsoft’s business.
The company had $198 billion in revenue and $83 billion in operating income last year and had its Microsoft Cloud going above $100 billion in annualized revenue for the first time.
The latest round of workforce downsizing is one of Microsoft biggest job cuts, only second to the 2014 job cuts that had about 18,000 employees losing their jobs. The 2014 reduction incidentally happened shortly after Nadella was appointed CEO, with 12,500 former Nokia employees axed as at then.
The past few months has had major big tech companies initiating massive job cuts, and Microsoft latest downsizing will be following in the footsteps of Meta and Amazon among others. The Facebook parent company had last year laid off about 11,000 employees while Amazon had to minus about 18,000 employees from its workforce.
CEO Nadella may have weeks ago laid the groundwork for today’s layoff announcement as he predicted that Microsoft and other big tech companies would face a very challenging two years ahead. He had in an interview with CNBC averred that like other tech corporation, Microsoft wasn’t “immune to the global changes”. He also spoke of the need for tech companies to be efficient and maybe reducing the expenditures of the company is one of his own ways of maintaining efficiency.
Ayoola Faseyi, an Abuja based Journalist with interest in Technology and Politics. He is a versatile writer with articles in many renowned News Journals.He is the Co-Founder of media brand, The Vent Republic.
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