Microsoft is cutting 10,000 workers, nearly 5% of its workforce, joining other tech companies that have scaled back their pandemic-era expansions.
The company said in a regulatory filing Wednesday that the layoffs are a response to “broad economic conditions and changing customer priorities.”
The company said it will make changes to its hardware portfolio and consolidate its leased office space.
Microsoft is cutting far fewer jobs than it added during the Covid-19 pandemic as it has more people working and studying from home due to a boom in demand for its workplace software and cloud computing services.
Microsoft’s workforce has expanded by about 36% in the two fiscal years since the outbreak of the pandemic, from 163,000 workers at the end of June 2020 to 221,000 in June 2022.
The layoffs “represent less than 5 percent of our total workforce, with some announcements taking place today,” CEO Satya Nadella said in an email to employees.
“While we will eliminate roles in some areas, we will continue to hire in key strategic areas,” Nadella said. He stressed the importance of building a “new computing platform” using advances in artificial intelligence.
Customers who accelerated their spending on digital technology during the pandemic are now “trying to optimize their digital spending to do more with less,” he said.
“We are seeing companies in every industry and geographies acting cautiously as some parts of the world are in recession while other parts are anticipating one,” Nadella wrote.
Other tech companies are also cutting jobs Amid concerns about an economic slowdown.
Amazon and business software maker Salesforce announced major job cuts earlier this month as they trim wages that have expanded rapidly during the pandemic lockdown.
Amazon has announced that it will cut about 18,000 positions. The layoffs are the largest in the Seattle-based company’s history, though only a fraction of its 1.5 million global workforce.
Facebook parent company Meta is laying off 11,000 people, about 13% of its workforce. And Elon Musk, the new Twitter CEO, has cut the company’s workforce.
Nadella, who attended the World Economic Forum’s annual meeting in Davos, Switzerland this week, did not directly address the layoffs on Wednesday.
Asked by the forum’s founder Klaus Schwab what technology layoffs mean for the industry’s business model, Nadella said companies that thrived during the COVID-19 pandemic are now seeing that demand “normalize.”
“Quite obviously, we should also be proficient in the technical field, right?” Nadella said. “It’s not about everybody doing less. We have to do less. So we have to show our own productivity gains through our own technology.
Microsoft did not immediately respond to questions about where the layoffs and office closings would be concentrated. As of June, there were 122,000 workers in the United States and 99,000 elsewhere.
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AP business writer Kelvin Chan contributed to this story from London.
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