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Wednesday, January 18, 2023

Microsoft to Lay Off 10,000 Workers as It Looks to Trim Costs - The New York Times

Microsoft to Lay Off 10,000 Workers as It Looks to Trim Costs

"The job cuts, which amount to less than 5 percent of the company’s work force, are its largest in roughly eight years.

Microsoft plans to lay off 10,000 workers, the company said Wednesday, as it looks to trim costs amid economic uncertainty and to refocus on strategic priorities, such as artificial intelligence.

The company employed about 221,000 workers as of the end of June, and the cuts amount to less than 5 percent of its global work force.

With the cuts, Microsoft becomes the latest tech giant to pull back after a frenzied few years of hiring, when the pandemic-fueled surge in online services and the expansion of cloud computing created fierce competition for tech talent.

“These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts,” Satya Nadella, Microsoft’s chief executive, said in a message to staff.

The layoffs, which will begin on Wednesday and continue through March, are the company’s largest in roughly eight years. Mr. Nadella cut about 25,000 jobs over the course of 2014 and 2015 as Microsoft abandoned its ill-fated acquisition of the mobile phone maker Nokia.

Like other tech companies, Microsoft expanded rapidly during the pandemic, hiring more than 75,000 people since 2019. Microsoft’s annual revenue grew 58 percent over three years, but rising interest rates and the prospect of a recession have tempered the company’s outlook. In the quarter that ended in October, it reported its slowest growth in five years and warned that more tepid results could follow.

Customers are seeking “to do more with less,” Mr. Nadella said. “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 changes, including severance and other restructuring expenses, will cost $1.2 billion, Mr. Nadella said. In a regulatory filing, Microsoft, which makes the Surface line of laptops and tablets, indicated some of the costs would come from making “changes to our hardware portfolio,” as well as consolidating office leases. Microsoft is scheduled to report its quarterly earnings on Tuesday.

Mr. Nadella said the company will continue to hire in strategic areas, and called advances in artificial intelligence “the next major wave of computing.”

The company has been pursuing several expensive bets, including potentially putting another $10 billion into its investment in OpenAI, which makes the explosively popular ChatGPT artificial intelligence system, and a $69 billion acquisition of the video game maker Activision that is facing challenges globally by antitrust regulators.

Other tech giants have also been reducing costs after several years of breakneck expansion. Amazon began what is expected to be a huge round of layoffs on Wednesday, as part of its plans to reduce its corporate work force by about 18,000 jobs.

The business software company Salesforce said this month that it planned to lay off 10 percent of its work force, or about 8,000 employees, and Meta, the parent company of Facebook, announced at the end of last year that it was cutting more than 11,000 jobs."

Microsoft to Lay Off 10,000 Workers as It Looks to Trim Costs - The New York Times

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