Microsoft has announced that it will begin eliminating a total of 10,000 jobs beginning today and concluding by the end of the third quarter of the 2023 fiscal year. In a company-wide blog post published January 18, CEO Satya Nadella discussed the layoffs as well as outlined what he feels Microsoft has to focus on to ensure that the company will be equipped to deal with current and future recessions while maintaining growth.
Between its gaming division, software developers, and operating systems, Microsoft continues to be a world-renowned brand that influences both gaming and the working world in a variety of ways. With over 220,000 employees worldwide, the announced layoffs are less than 5% of Microsoft's total workforce but will cost the company $1.2 billion in severance expenses in 2023's second quarter.
The CEO wrote that these costs include severance pay for qualifying U.S.-based employees which would be higher than normal market value, six months of continued healthcare coverage, career transitional services, and 60 days prior termination notice regardless of whether a state requires it or not. He also wrote that employees affected by the company layoffs outside the U.S. would receive benefits that align with their country's laws.
Microsoft will continue to hire workers for certain key strategic areas while eliminating others Nadella also wrote in the company-wide blog post. One of these strategic areas may be Artificial Intelligence, as over the last few years Microsoft has been buying up businesses with that specific focus. Companies like Nuance Communications, an AI and speech recognition software provider most notably used in the field of healthcare, which Microsoft bought in March 2022 for $18.8 billion.
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The CEO notes how Microsoft had noticed an increase in digital spending during the early day of the pandemic but points out that it appears most consumers are more recently attempting to do more with what they have. This comes after the company's first fiscal quarter which saw its net income decline by 14% to $17.56 billion due to a slow-down in new computer sales. It was still able to offset these losses with Microsoft's cloud-based services, which saw an increase of 11% in its revenue to the tune of $50 billion over the same time period.
Though there is no mention of where exactly these cuts are set to take place, the loss of this many employees is likely to impact every part of Microsoft in some way. These may include those within the Xbox community, even though Microsoft saw a 3% increase in revenue from its Xbox brand in 2022, and more recently set a quarterly profit record for Microsoft's gaming division. Regardless of its profitability, Microsoft and other companies continue the trend of new-year mass layoffs that have seemingly become almost normal. Despite this, people will continue to flock to a brand like Microsoft that continues to dominate in a vast variety of different entertainment and technology-based sectors.
Source: Microsoft Corporate Blogs