Microsoft chairman and chief executive, Satya Nadella, on Wednesday said that the company will reduce 10,000 jobs across the company’s entire workforce by the third quarter of its 2023 financial year. In a note to employees, Nadella said, “As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them 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.”
“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 percent 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,” Nadella said.
The company counts July to June as its financial year. However, the top executive also added that the company will invest in “strategic areas in future”.
“We will continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company while divesting in other areas,” Nadella said.
The decision comes after fellow big tech firms Meta and Amazon announced decisions to lay off 11,000 and 10,000 employees, respectively.
“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 letter to employees, now published in a blog post by Microsoft, read.
The firm will also support laid-off employees with severance benefits.
“U.S.-benefit-eligible employees will receive a variety of benefits, including above-market severance pay, continuing healthcare coverage for six months, continued vesting of stock awards for six months, career transition services, and 60 days notice prior to termination, regardless of whether such notice is legally required. Benefits for employees outside the U.S. will align with the employment laws in each country,” added Nadella.