Satya Nadella, CEO of tech giant Microsoft, revealed on Wednesday (January 18) that the company is cutting its workforce by 10,000 jobs.
Nadella, writing in a note to employees, shared online by Microsoft, cites a post-pandemic drop in digital spending among consumers and a looming recession in some parts of the world.
“Organizations in every industry and geography are cautious because some parts of the world are in a recession and other parts are anticipating a recession,” Nadella wrote.
He also stated, “The next major wave of computing is born with advances in artificial intelligence, as we transform the world’s most advanced models into a new computing platform.”
The Microsoft CEO says the 10,000 cuts amount to “less than 5 percent” of the company’s total workforce and that some employees are notified of their job losses on Wednesday.
“It is important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas. We know this is a difficult time for everyone affected.”
Satya Nadella, Microsoft
Said Nadella: “It is important to note that while we are eliminating roles in some areas, we will continue to recruit in key strategic areas. We know this is a difficult time for everyone affected.
“We and the senior leadership team are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible.”
Wednesday’s news about Microsoft marks the latest move by the tech giant to make a significant cut in its workforce, and follows similar killings at Meta which announced 11,000 job cuts in November, and at Amazon, which announced 18,000 job cuts in January.
In the broader technology and adjacent music industry, it was reported on Friday (January 13) that SoundHound, the speech and music recognition company, laid off nearly half of its employees earlier this month, less than a year after the company went public on Nasdaq.
Other companies to lay off workers in recent months include SoundCloud, which in August began the process of shrinking its global workforce by about 20%.
US-based BMI (Broadcast Music, Inc) confirmed in the same month that it would lay off “just under 10%” of its total workforce.
According to tracking website Layoffs.fyi, 104 tech companies have laid off workers so far this year, with a total of 26,061 tech workers losing their jobs.
You can read Satya Nadella’s memo to staff in full below:
Satya Nadella shared the communication below with Microsoft employees.
We live in times of great change, and as I meet with clients and partners, a few things are clear. First, as we’ve seen customers accelerate their digital spending during the pandemic, we’re now seeing them optimize their digital spending to do more with less. We’re also seeing organizations in every industry and geography exercise caution because some parts of the world are in a recession and other parts are anticipating it. At the same time, the next major wave of computing is being born with developments in artificial intelligence, as we transform the world’s most advanced models into a new computing platform.
This is a context in which we as a company must strive for results on an ongoing basis, while investing in our long-term opportunity. I am confident that Microsoft will emerge from this stronger and more competitive, but this requires us to take actions based on three priorities.
First, we’ll align our cost structure with our revenue and where we see customer demand. Today, we are making changes that will reduce our total workforce by 10,000 jobs through the end of fiscal ’23, Q3. This is less than 5 percent of our total employee base, with some notice happening today. It is important to note that while we are eliminating roles in some areas, we will continue to recruit in key strategic areas. We know this is a difficult time for everyone affected. The senior leadership team and I are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible.
Secondly, we will continue to invest in strategic areas of our future, which means that we will allocate our capital and talents to areas of secular growth and long-term competitiveness of the company, while divesting into other areas. These are the kinds of tough choices we’ve made over our 47-year history to remain a company that matters in an industry that is so unforgiving as to adapt to platform shifts. As such, we incur charges of $1.2 billion in the second quarter related to termination costs, changes to our hardware portfolio, and lease consolidation cost as we create higher density across our workspaces.
And third, we will treat our people with dignity and respect, and act with transparency. These decisions are difficult, but necessary. It is especially difficult because it affects the lives of people and people – our colleagues and friends. We are committed to ensuring that all of those whose roles have been canceled have our full support during these transitions. Employees who qualify for American benefits will receive a variety of benefits, including above-market severance pay, six-month continuous health care coverage, continued stock awards for six months, job transition services, and 60 days notice before termination, no matter what. Whether such notice is legally required. The benefits that employees receive outside the United States are consistent with the labor laws of each country.
When I think about this moment in time, the beginning of 2023, it’s showtime — for our industry and for Microsoft. As a company, our success must align with the success of the world. This means that each of us and every team in 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. If we achieve this, we will emerge stronger and prosper long into the future; It’s that easy.
I want to extend my sincere thanks and gratitude to everyone who has contributed to Microsoft up to this point and to all of you who will continue to contribute as we chart our way forward. Thank you for the focus, dedication, and flexibility you show Microsoft, our customers, and our partners every day.
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