ALBAWABA — Microsoft on Wednesday said it would layoff 10,000 employees in the coming months as part of broader cost-cutting measures as consumer trends change and the global economic slowdown continues to burden tech giants.
“No one can defy gravity and gravity here is inflation-adjusted economic growth,” Microsoft CEO Satya Nadella told World Economic Forum founder Klaus Schwab in a livestreamed discussion.
"During the pandemic, there was rapid acceleration. I think we're going to go through a phase today where there is going to be some amount of normalization of that demand," Nadella added.
The job cuts represent less than 5 percent of the company’s total workforce and the cuts will be completed by the end of March, the CEO said.
In a filing with the US Securities and Exchange Commission (SEC), Microsoft said the cutbacks would result in a charge of $1.2 billion in its next results announcement, expected on January 24.
"It's important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas," Nadella wrote in a letter to employees, published by the SEC, referring to the company's move towards artificial intelligence, by its continued interest and investment in OpenAI, creator of ChatGPT.
“We’re living through times of significant change, and as I meet with customers and partners, a few things are clear.
“First, 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,” Nadella added.
Outplacement firm Challenger, Gray & Christmas reported that United States tech layoffs were up 649 percent in 2022 year-over-year, while there was only a 13 percent rise in job cuts in the general economy during the same period.
Layoffs continue in 2023 as inflation weighs on consumer spending, rising interest rates squeeze funding and the pandemic-fueled high demand for digital services tapers off as people return to their normal offline lives.
Amazon also started laying off more than 18,000 employees this week and Salesforce laid off about 10 percent of workers earlier this month.
