Multiple sources, including Bloomberg and Sky News (opens in new tab), confirm that Microsoft will announce wide-ranging layoffs across "a number of engineering divisions." Microsoft currently employs over 221,000 workers globally, and this newest round of cuts could see that figure slashed by 5 percent. If true, more than 10,000 workers will, unfortunately, lose their jobs.
The official announcement of the layoffs could come as early as Wednesday. Microsoft's hiring exploded during the pandemic as more people worked from home and relied on the company's software products and cloud services. In September 2022, CEO Satya Nadella confirmed that the company hired 50,000 people between 2020 and 2022. Now, as the global economy slows and fears of a lingering recession materialize, Microsoft is focused on cutting costs.
"We did have a lot of acceleration during the pandemic, and there's some amount of normalization of that demand," said in an interview with CNBC earlier this month. "[There are] clearly many, many challenges right now around the world. For us as a global company, we're not going to be immune from what's happening in the macro. We'll also have to get our own operational focus to make sure our expenses are in line with our revenue growth."
We should note that Microsoft isn't the only big tech firm faced with reducing its workforce. For example, Facebook's parent company Meta eliminated 11,000 jobs in 2022, and Amazon revealed two weeks ago that it would lay off 18,000 employees during 2023 (nearly double what earlier reports had suggested). Likewise, Salesforce announced this month that it would lay off 10 percent of its workforce (roughly 8,000 employees).
According to Microsoft's June 30th regulatory filing, 122,000 of its full-time employees are based in the United States. The remaining 99,000 work from the company's various offices around the globe. It is likely that Microsoft's U.S. workforce will take the brunt of the looming cuts.
Microsoft will update investors on its financial performance on January 24th. During fiscal Q1 2023 (opens in new tab), Microsoft reported an 11 percent increase in revenue to $50.1 billion (an 11 percent increase year-over-year) and net income of $17.6 billion (a 14 percent decrease year-over-year).
"In a world facing increasing headwinds, digital technology is the ultimate tailwind," said Nadella at the time. "We're focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way."