Microsoft Corp. announced on Wednesday that it would be cutting 10,000 jobs, or around 5% of its workforce this year, as a means to address the challenging economic conditions affecting many major players in the technology industry. The decision will result in a $1.2 billion charge in the second quarter, as per the company’s statement in a blog post.
These job cuts come as the software giant is experiencing a decline in customer spending, particularly in regions that are currently in recession. With Microsoft set to release its fiscal second-quarter earnings on January 24th, it is clear that the economic climate is having an impact on the company’s operations. CEO Satya Nadella stated that the company is observing “customers optimize their digital spend to do more with less.”
While other tech companies such as Amazon.com Inc., Meta Platforms Inc. and Salesforce Inc. have recently made significant job cuts, Microsoft has taken a more conservative approach in addressing the uncertain global economic outlook and potential decline in demand for software and services.
The company based in Redmond, Washington has halted hiring and eliminated open positions, even in priority businesses such as security software and cloud computing. It has also recently reduced its workforce of 221,000 by less than 1% in October and July.
Many were surprised by this move as Microsoft has been a stable player in the tech industry and has been performing well financially. However, the company has decided to take this step as a precautionary measure to stay ahead of the curve and prepare for any potential economic downturn. The job cuts will be across all business units, and the company plans to offer severance packages and other support to those affected.