Microsoft is the latest tech company to make significant cuts due to an unforeseeable economic future.
On Wednesday, Microsoft CEO Satya Nadella spoke about the layoffs saying the company is not immune to global economic changes and cutting 10,000 jobs.
“No one can defy gravity, and gravity here is inflation-adjusted economic growth,” Nadella said. The announcement was broadcasted at the World Economic Forum in Davos, Switzerland.
“We’re living through times of significant change, and as I meet with customers and partners, a few things are clear,” he wrote in the memo. “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.”
“Second, we will continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company while divesting in other areas,” the memo continued.
As of June 2022, Microsoft staffs over 200,000 employees, and job cuts will represent 5% of the company’s total workforce. The new employee count will be reflected by March’s fiscal third quarter of the year.
“And third, we will treat our people with dignity and respect and act transparently. These decisions are difficult but necessary. They are especially difficult because they impact people and people’s lives – our colleagues and friends. We are committed to ensuring all those whose roles are eliminated have our full support during these transitions.”
Microsoft isn’t the only company to make major cuts. Amazon, Meta, and Facebook have all been making major cuts to their workforces, citing different reasons. Meta CEO Mark Zuckerburg noted over-hiring during the pandemic, while Amazon said the company continues to face an “unusual and uncertain macroeconomic environment” in a blog post in November 2022.
Though Microsoft is making significant cuts, Nadella said the company will continue to “hire for key strategic roles.”
The announcement comes after rumors of a significant investment from Microsoft into OpenAI, hinting that AI may be the future very well.