Microsoft is laying off 10,000 employees, citing customers pulling back on spending during the ongoing economic downturn.
The job cuts will help Microsoft better “align” the company’s cost structure when customer demand is down, Microsoft CEO Satya Nadella said on Wednesday.
“First, 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. 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 said.
The cuts comes as demand for PCs plunged in 2022, following two years of skyrocketing growth. Microsoft’s total employee base stands at 221,000 people. So the layoffs will affect less than 5% of its total workforce. The cuts begin today and will continue through Q1.
In addition, Microsoft plans on “divesting” from certain businesses, which will include changes to the company’s hardware portfolio, although no details were given. But despite the job cuts, Nadella added his company will continue hiring and investing in “key strategic areas.”
One of them will no doubt include artificial intelligence. Microsoft is reportedly considering investing another $10 billion in OpenAI, the San Francisco lab behind the AI-powered ChatGPT and DALL-E 2 programs. On Monday, the company announced it’s incorporating ChatGPT and DALL-E 2 into a new Azure AI service, making it easier for enterprises to access the programs.
Microsoft announced the layoffs as tech companies across the industry, including Facebook’s Meta and Lyft, have been cutting jobs, citing the economic downturn. Earlier this month, Amazon announced it’s in the process of laying off 18,000 positions.