It has just been announced that Microsoft has laid off more than 10,000 employees. Whilst the job cuts make up less than 5% of the company’s workforce, the cuts mark the company’s largest in roughly eight years.
This eight year mark refers to when Satya Nadella, Microsoft’s chief executive, 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.
What makes the move seem like a faux pas is that only six months ago did Microsoft employ about 221,000 workers.
“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,” Nadella said in a message to staff.
Like other tech companies, Microsoft expanded rapidly during the pandemic. It has hired more than 75,000 people since 2019, seizing on the surge in online services and the expansion of cloud computing. Furthemore, October 2022 marked the company’s slowest growth in five years and warned that more tepid results could follow.
According to Nadella, the changes, including severance and other restructuring expenses, will cost $1.2 billion. 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 is expected to begin a huge round of layoffs on Wednesday as part of its plans to reduce its corporate workforce by about 18,000 jobs. Meanwhile Amazon Prime has just seen its first no growth year ever.