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Microsoft axes 10,000, already breaking bad news to staff

Remaining Redmondites told they need to ‘raise the bar’

Microsoft will cut the jobs of 10,000 employees by the end of March. The move follows smaller rounds of layoffs at the software company last year as cloud growth slows due to the worsening economic situation.

CEO Satya Nadella confirmed in an SEC filing just minutes before publication: "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."

He added: "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."

The Windows giant is believed to employ about 221,000 workers in total across its global workforce, with a 10,000 cut representing a much larger layoff than any of the most recent rounds.

Nadella added that "US-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 US will align with the employment laws in each country."

Performance in the sheets

The CEO also had words for the remaining troops: "When I think about this moment in time, the start of 2023, it's showtime – for our industry and for Microsoft. As a company, our success must be aligned to the world's success. That means every one of us and every team across the company must raise the bar and perform better than the competition to deliver meaningful innovation that customers, communities, and countries can truly benefit from."

Microsoft laid off around 1,000 people in October last year, understood to be across the organization at all levels, teams and geographic locations, although the company did not specify numbers or areas.

Earlier in 2022, in July, the company said goodbye to about 1,000 employees, also believed to be across geography and job roles, including consulting, partner solutions, and customer groups.

The news of the impending layoffs comes just before Microsoft is expected to release its financial results for the second quarter of its fiscal year 2023 next week. During its earnings call for the previous quarter, the company reported a 14 percent decline in net income to $17.6 billion, with $800 million of increased energy costs being blamed for some of that hit.

At the time, financial analysts expressed concern about future revenue and margins from Microsoft's Azure cloud, which although still bringing home the profits, is showing slower growth than in previous years.

Revenue from Windows licenses was also down 15 percent during the previous quarter, with Microsoft expecting a further fall as PC sales slump due to rising inflation rates, lots of buying activity in the pandemic and general economic woes.

In an interview earlier this month, CEO Satya Nadella said the next two years are going to be tough for the tech industry, and that companies would need to look inside themselves and ask if they are as efficient as they need to be competitive.

Microsoft is not the only tech giant shedding employees as trading conditions worsen. Online bazaar Amazon announced earlier this month that it intended to make around 18,000 job cuts, with the axe due to fall this week. It is believed that these will mostly affect the retail division and human resources.

Also earlier this month, SaaS giant Salesforce disclosed drastic plans to cut 10 percent of its entire workforce, which could lead to the worldwide loss of 7,000 jobs at the company. ®

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