Microsoft Cuts 10K Jobs as Consumers ‘Do More With Less’

Microsoft is laying off 10,000 workers, part of an ongoing wave of tech job cuts.

The layoffs, which represent a little under 5% of the company’s staff, were announced Wednesday (Jan. 18) in a message to employees from CEO Satya Nadella. He told his staff the layoffs are happening amid a time of “significant” changes.

“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 wrote. “We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.”

The CEO also noted that Microsoft would take a $1.2 billion charge in its second quarter “related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces.”

The software giant cut about 1% of its staff last year as part of a broader push to reduce expenses that also included a hiring freeze, as well as efforts to get staff to scale back on spending on things like travel, training, and company events.

With the latest layoffs, Microsoft continues a wave of job cuts that have plagued the tech sector since last year, when companies eliminated 153,000 positions.

Among them was Meta, which cut 11,000 jobs. CEO Mark Zuckerberg blamed the decision on his misguided beliefs about pandemic eCommerce.

In a memo to employees, Zuckerberg said many people predicted that the increase in eCommerce shopping that started with COVID-19 would continue beyond the pandemic.

“I did too, so I made the decision to significantly increase our investments,” Zuckerberg wrote, one day after announcing the first wide-ranging layoffs in Meta’s history.

Amazon announced last year it was cutting 10,000 jobs, but more recently has upped that figure to 18,000.

“Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year,” CEO Andy Jassy wrote in a company blog post earlier this month, asking employees to stay “scrappy.”

Last year overall was a rough year for the tech companies tracked by PYMNTS for its CE 100 Index, as noted here earlier this month.

“Inflation ran rampant this past year and the rate hikes pressured businesses and consumers alike, leading to Wall Street worries over spending, profits and slowing top-line growth, and how the great reopening might affect it all,” PYMNTS wrote.

Meanwhile, the 10 top tech stocks lost a combined $4.6 trillion in market cap in 2022. Microsoft was fourth on that list — following Amazon, Google, and Apple — ending the year with a market cap that was $726 billion lower than the one with which it started.