Yesterday Microsoft was rumored to be preparing to reduce its workforce by 11,000 jobs, and today the company made the official announcement that it would be in fact cutting 10,000 jobs over the next three months.
According to the Official Microsoft Blog, Microsoft CEO Satya Nadella shared in part, the following,
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.
Microsoft is the latest big tech firm to tighten its purse strings and move to cost saving measures via massive layoffs as it joins crosstown rival Amazon who is sent out is its own severance notice today to 18,000 employees.
The move by tech firms to reduce their labor comes as pandemic-led acceleration comes to halt, and customer bases begin to “do more with less,” according to Nadella.
While Nadella opens his letter to employees highlighting the effects of a pseudo post-pandemic economy, he also notes the company also made some bets that haven’t panned out the way company may have initially planned.
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.
It is unclear what hardware was/will be cut that could add to the $1.2 billion debt Microsoft took on, but we do know the company has sunk a lot of money into revamping and expanding its Redmond campus over the past two years to only be met with increasing work-from-home demands by its employees.
While unfortunate as the news is today for all affected by the planned layoffs, Microsoft noted that it’s factoring in severance compensation for those who will leave the company in the form of a variety of benefits packages.
We are committed to ensuring all those whose roles are eliminated have our full support during these transitions. 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.
Microsoft is not unique in its current position but that doesn’t make today’s announcement of layoffs any less unfortunate to report on.