Microsoft plans to layoff 10,000 employees, becoming the latest tech company to take drastic steps to reduce its headcount.
“During the pandemic there was rapid acceleration. I think we are going to go through a phase today where there is some amount of normalization in demand,” Microsoft CEO Satya Nadella said at the World Economic Forum in Davos, Switzerland. “We will have to do more with less — we will have to show our own productivity gains with our own technology.”
“No one can defy gravity and gravity here is inflation-adjusted economic growth,” he added.
In a memo to staffers, Nadella said “these decisions are difficult, but necessary,” and said 5% of the workforce would be affected. More than half of Microsoft’s 221,000 full-time employees are based in the U.S.
All affected employees will be notified by March and will receive “above-market severance pay,” 60 days of advance notice, six months of continued health coverage and other continued benefits.
However, the company “will continue to hire in key strategic areas,” Nadella said.
“When I think about this moment in time, the start of 2023, it’s showtime — for our industry and for Microsoft. As a company, our success must be aligned to the world’s success,” he wrote. “That means every one of us and every team across the company must raise the bar and perform better than the competition to deliver meaningful innovation that customers, communities, and countries can truly benefit from. If we deliver on this, we will emerge stronger and thrive long into the future; it’s as simple as that.”
Facebook and Instagram parent Meta, Google, Twitter and Amazon have also announced large layoffs in recent months. Several tech CEOS, including Meta’s Mark Zuckerberg, have blamed themselves for the layoffs, claiming they over-hired during the pandemic.
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