Wave of tech layoffs continues as Microsoft will cut 10,000 jobs

Microsoft will cut 10,000 jobs, the company announced on Wednesday, joining other global tech giants who also have laid off thousands.

CEO Satya Nadella said the software giant also would be taking a $1.2 billion charge in its upcoming earnings report, related to severance costs. It is set to report quarterly results on Jan 24.

In a note to employees, Nadella attempted to address the divergent outlook for different parts of the business.

Customers wanted to "optimize their digital spend to do more with less" and "exercise caution as some parts of the world are in a recession and other parts are anticipating one", he said. "At the same time, the next major wave of computing is being born with advances in AI."

Nadella said the layoffs, affecting less than 5 percent of Microsoft’s workforce, would conclude by the end of March, with notifications beginning Wednesday.

Microsoft is laying off 878 full-time workers at its Redmond headquarters, according to an update on Washington state’s Worker Adjustment and Retraining Notification page. Under US law, most employers are required to report staff cuts affecting 50 or more workers at a single location.

The company has seen declining growth in its cloud business and also slumping sales of PCs.

"It was a rip-the-Band-Aid-off moment from Nadella and Microsoft, and we’re seeing it across tech," Wedbush analyst Dan Ives told Yahoo Finance Live. "These companies were spending like 1980’s rock stars at a pace that was unsustainable."

The Wall Street Journal reported that inside Microsoft, headquartered in Redmond, Washington, some employees were frustrated that the CEO was attending the World Economic Forum in Davos, Switzerland, as the layoffs were announced.

Last year, Microsoft cut 1 percent of its workforce, or about 2,000 jobs. The company also has eliminated open positions and halted hiring.

Microsoft had 221,000 full-time employees as of June 30 last year. Some 122,000 of those were in the United States; 99,000 were in other areas of the world.

"Here’s one of the marquee growth companies with a very distinct user base saying that perhaps economic conditions aren’t nearly as good as we thought they were," said Brian Frank, a portfolio manager at Frank Funds who has owned Microsoft stock on and off over the last several years.

Earlier this month, though, Nadella warned of turbulence in the tech sector, telling India’s TV 8: "The next two years are probably going to be the most challenging. We did have a lot of acceleration during the pandemic, and there’s some amount of normalization of that demand. And on top of it, there is a real recession in large parts of the world. We will have to adjust."

Amazon, Meta and Salesforce top tracking site Layoffs’ lists with about 18,000, 11,000 and 8,000 staffers laid off, respectively, between November 2022 and January 2023.

In an internal memo seen by Reuters, Amazon said that affected workers in the United States, Canada and Costa Rica would be informed by the end of the day. Employees in China will be notified after the Chinese New Year.

The job cuts at Amazon primarily affected those in corporate roles, including in the company’s Devices and Books businesses and human resources department, according to Business Insider. Meta cut positions across the company, including its Reality Labs division overseeing metaverse initiatives, Insider reported.

On an average, about 1,600 workers have gotten the pink slip every day in 2023 so far, according to Layoffs.

Globally, 91 tech companies already have laid off 24,151 workers just 15 days into 2023, according to Layoffs. That is about 15 percent of the 154,256 workers who were laid off by more than 1,000 tech companies in 2022.

"We haven’t seen this activity since the dot-com bust," said Andrew Challenger, senior vice-president at outplacement firm Challenger, Gray & Christmas.

Job cuts also have hit Wall Street.

Last week, Goldman Sachs started laying off 3,000 employees globally as dealmaking slows. Goldman Sachs reported Tuesday that fourth-quarter profit plunged 66 percent from a year ago.

Black Rock, the world’s largest asset management firm, is also slashing up to 500 roles for the first time in four years.

Agencies contributed to this story.