Microsoft to cut 10,000 jobs, citing economic headwinds

Microsoft said it is going to cut 10,000 jobs on Wednesday, becoming the latest big tech company to slash jobs.

CEO Satya Nadella wrote in a memo Wednesdaythat the company was 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."

He added the overall reduction of the workforce would continue through the third quarter of 2023 fiscal year. Microsoft said in its regulatory filing that the layoffs were a response to "macroeconomic conditions and changing customer priorities."

The company's Q2 earnings are due next week, with the company saying that it was expecting to post its slowest revenue increase in years.

Nadella was in Davos, Switzerland, for the World Economic Forum (WEF) gathering on Wednesday, where he said that the hiring boom the biggest tech companies saw during the pandemic were now seeing "normalization" on that front.

He told WEF founder Klaus Schwab in a discussion there that "no one can defy gravity and gravity here is inflation-adjusted economic growth."

Microsoft grew from about 163,000 workers at the end of June 2020, to 221,000, in June 2022.

Microsoft layoffs represent 5% of company workforce

Nadella said in his memo that layoffs represent "less than 5% of out total employee base, with some notifications happening today."

It was not immediately clear where the layoffs will take place.

Microsoft is cutting far fewer jobs than it added during the COVID pandemic, when the tech sector overall saw a boom in hiring given the high demand for its services at the time.

Nadella said that despite eliminating roles in some areas, they would continue hiring in "key strategic areas."

The layoffs come amid rumors about a significant investment from Microsoft into OpenAI, the company behind the popular AI chatbot, ChatGPT.

Microsoft not the only big tech company to announce layoffs recently.

Amazon said earlier this month it be cutting about 18,000 positions, its largest set of layoffs in its history, although it represents a fraction of its 1.5-millon global workforce.

Meta, Facebook's parent company, said in November that it would be laying off 11,000 people, about 13% of its workforce.

Elon Musk, the new CEO of Twitter, also made job cuts after taking over.