Microsoft has announced its plans for laying off around 10,000 employees as a part of stringent cost-cutting measures following low sales numbers during 2022. The company announced this decision on Wednesday in its SEC filing. This has added another technology company to the list of companies doing mass layoffs as a way of battling with the slowing economy and inflation. Throughout 2022, technology companies have struggled to keep up with the slowing economy and inflation which has changed the way people are spending their money. People are more focused on investing or spending their money on necessary things rather than on luxury and entertainment products. The effect of slowing the economy and inflation was seen in almost all big tech companies such as Google, Apple, Microsoft, Twitter, Facebook, and many others.
These companies have either lowered their spending on advertising and marketing or lowered their production as primary measures to address their slowed sales and decreased revenue. But due to continued inflation, these companies were forced to take the extreme measures of laying off thousands of employees as a cost-cutting measure. The new year started with an announcement of a layoff from Amazon. On January 5th, Amazon announced that it will be laying off 18,000 employees globally. Following this, Amazon has started laying off employees in many countries such as India, the US, Canada, Costa Rica, etc. Now Microsoft has joined Amazon in the process of Laying off employees.
Along with mentioning the announcement in the SEC filing, the company also announced its decision to layoff at the World Economic Forum on Wednesday. Satya Nadella, the CEO of Microsoft, addressed the decision of layoff in front of the audience gathered at the World Economic Forum in Davos, Switzerland. While interacting with Klaus Schwab, the founder of the World Economic Forum, Nadella said that no company is immune to inflation-adjusted economic growth. Nadella also interacted with the employees working at Microsoft through a memo. He said in his memo that the times have changed for digital services as people have significantly lowered their spending on digital goods. Because of this, Microsoft has seen a significant decline in its profits throughout 2022, pushing the company to opt for cost-cutting measures.
During the mid of 2022, when the world had started recovering from COVID-19, Microsoft had a total headcount of 221,000 full-time employees globally. Almost 50% of these employees belong to the US as it is the native region of the company. Satya Nadella said at the WEF that the percentage of employees laid off accounts for less than 5% of the original headcount. He also made it clear that the layoffs will be completed by the end of March this year, when the company will report the end of its fiscal year. As a part of these layoffs, the company will be facing a charge of $1.2 billion as a part of many related expenses. He further added in his memo that although these measures are extremely difficult, they are necessary for the sustenance of the company.