Microsoft CEO Satya Nadella announced this today lay off 10,000 workers (opens in new tab) as part of an effort to “align our cost structure with our revenues and where we see customer demand”.
It’s an astonishing number of job cuts, even though it represents a relatively small fraction of Microsoft’s total workforce: Nadella said in the memo released today that the cuts make up less than five percent of the company’s workforce, which is estimated to be about 221,000 employees worldwide (opens in new tab).
Some employees will be notified of their layoffs today, but the cuts will continue through the third quarter of Microsoft’s fiscal year 2023, which ends March 31. our hardware portfolio and the cost of lease consolidation as we create higher density in our workspaces.”
It is not yet publicly known where the cuts will be made. A Bloomberg (opens in new tab) report quoted a source as saying the company’s tech departments are being targeted, while another (opens in new tab) sources quoted say workers at Starfield developer Bethesda Softworks and Halo studio 343 Industries will also be laid off. Xbox chief engineer Gary Waliczek also said in a since-deleted tweet that the gaming divisions will be affected.
Nadella said the layoffs were necessitated by a slowdown in digital spending that had accelerated during the early years of the Covid-19 pandemic, as well as wider industry concerns about an impending recession.
“These are the kind of tough choices we’ve made in our 47-year history to remain a consistent company in this industry that is ruthless to anyone who doesn’t adapt to platform shifts,” Nadella said.
The cuts come a year after Microsoft announced it plans to acquire Activision Blizzard, which itself employs nearly 10,000 people, for $68.7 billion. That purchase is currently trudging through regulatory tangles as Sony and others (opens in new tab) trying to prevent Microsoft from owning an even larger share of the gaming industry after Bethesda’s acquisition.
Microsoft will announce fiscal year 2023 second quarter results on January 24. Microsoft made $50.1 billion during the first three months (opens in new tab) of the fiscal year, resulting in net income of $17.6 billion.
Including stock prices, Nadella earned $54.95 million in 2022. The next most highly compensated executive was CFO Amy Hood, who received $26.3 million.
Microsoft isn’t the only major tech company to announce major layoffs in recent months. In November 2022, Facebook parent company Meta (Q3 FY2022 net income $4.4 billion) announced plans to 11,000 employees (opens in new tab)and in January Amazon (Q3 FY2022 net income $2.9 billion) said it was more than 18,000 employees (opens in new tab) until early 2023.