Microsoft said it will lay off 10,000 employees this year, the latest tech firm to slash jobs as the sector contracts after a pandemic-era boom.
The layoffs will affect nearly 5% of Microsoft’s global workforce, the company said.
“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,” Microsoft CEO Satya Nadella said in a memo to employees on Wednesday.
“We’re also 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 company said the job cuts, changes to its hardware portfolio and consolidation of its real estate holdings would result in a $1.2 billion charge.
A tech industry downturn – marked by a 33% drop in the Nasdaq last year – has brought job cuts across the sector, including at large firms like Amazon and Facebook-parent Meta.
The layoffs at Microsoft arrive in response to “macroeconomic conditions and changing customer priorities,” the company said in a filing with the Securities and Exchange Commission.
The move follows a wave of job cuts in October that eliminated nearly 1,000 positions.
Shares of Microsoft fell roughly 1% in early trading on Wednesday morning in response to the news.
The company did not immediately respond to a request for comment. Microsoft employs about 221,000 workers worldwide.
Sales at top tech firms have retreated from the blistering pace attained during the pandemic, when billions across the world were forced into isolation. Customers stuck at home came to rely on delivery services like e-commerce and virtual connections formed through social media and videoconferencing.
Persistent recession fears, rising interest rates and a shift back toward a pre-pandemic lifestyle have bludgeoned the industry, experts say.
Microsoft announced the layoffs on the same day that Amazon began cutting 18,000 workers. Amazon CEO Andy Jassy said the company was set for layoffs in a memo to employees earlier this month.
In the memo, Jassy cited an “uncertain economy” as the primary reason behind the job cuts.
Amazon officials are “deeply aware that these role eliminations are difficult for people, and we don’t take these decisions lightly or underestimate how much they might affect the lives of those who are impacted,” Jassy said.
Over the past year, major tech companies have cut hundreds of thousands of jobs. The list of companies that have undertaken layoffs includes Twitter, Lyft, Stripe, Salesforce, Coinbase and Robinhood.
“When I think about this moment in time, the start of 2023, it’s showtime – for our industry and for Microsoft,” Nadella said. “As a company, our success must be aligned to the world’s success.”