Microsoft CEO Satya Nadella announces the intention to fire 10,000 employees.

 

In a blog post published only hours after media sources predicted further layoffs, Microsoft CEO Satya Nadella announced that the company would lay off 10,000 workers, or 5% of its workforce.

"Today, we are implementing adjustments that will cause a 10,000 job reduction in our overall workforce through the end of the third quarter of FY23. With some notifications taking place today, this represents less than 5% of our whole employee base, according to Nadella's blog post.

The CEO attributed the downsizing move to the company's desire to match its cost structure with that of its revenue structure while investing in areas that it anticipates will experience long-term development.

As a result of a strong US dollar and a continuing downturn in personal computer sales, Microsoft's first quarter of fiscal 2023 recorded its weakest growth in five years. As a result, net income decreased by 14% to $17.56 billion from this time last year.

Continue making strategic hires and investments

It's crucial to remember that, despite reducing positions in some areas, Nadella said, "we will continue to hire in vital strategic areas."

The integration of AI into goods and services like Azure, Office 365, and Bing may be one of these important areas.

Microsoft has shifted its attention in recent weeks to working with conversational AI engine developer OpenAI, whose ChatGPT, which was introduced in November of last year, caught the internet's attention as it demonstrated a new method of searching the internet.

The business intends to utilise the surge in interest to integrate the ChatGPT engine into its Bing and Azure offerings. After spending $1 billion in OpenAI in 2019, it is anticipated to invest an additional $10 billion in the technology.

Microsoft will incur costs of $1.2 billion as a result of layoffs.

Microsoft stated the decision to eliminate 10,000 jobs will result in a one-time cost of $1.2 billion.

"As we generate more density throughout our workspaces, we are incurring a $1.2 billion charge in Q2 related to severance expenses, changes to our hardware portfolio, and the cost of lease consolidation," Nadella said.

The business also stated that it is offering transition packages to the downsized staff.

According to Nadella's letter, employees in the US should expect advantages like above-market severance pay, ongoing healthcare coverage for six months, prolonged stock award vesting for six months, career transition services, and 60 days' notice before termination.

The senior executive said, "Benefits for employees outside the US will accord with the employment rules in each country."

Days after Amazon and Salesforce made the decision to fire a combined 26,000 people, Microsoft announced that it will lay off 5% of its personnel.

Since August of last year, major technology companies have kept their staffing levels low.

According to data compiled by layoffs.fyi, 104 IT companies have already let nearly 26,000 employees go in the first 18 days of 2023. According to the platform, 1,021 businesses fired 154,036 workers in the previous year.