Microsoft is reportedly planning to layoff 11,000 employees

The tech industry is preparing for "sustained turbulence" ahead.
Ameya Paleja
The Microsoft Asia-Pacific Research and Development Group.
The Microsoft Asia-Pacific Research and Development Group.

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Microsoft Corp. is set to join the list of technology companies that have laid off a considerable share of its workforce as the fears of recession loom large, Fast Company reported. Although unconfirmed, the company is allegedly looking to lay off roughly five percent of its staff, a move that will impact over 11,000 employees.

Technology companies started braving tougher times last year after the U.S. Federal Reserve began increasing interest rates to rein in inflation. As money becomes more expensive to raise, the Federal Reserve expects demand to dampen and put downward pressure on prices that have been rocketing since the pandemic.

However, this has also had an impact on technology companies that showed tremendous growth during the pandemic period and increased their employee counts to meet the new demand. With demand expected to slow down, companies are now sizing down their operations to stay afloat as a tough period looms ahead.

Microsoft announces major layoffs

Microsoft has been under pressure to demonstrate growth at its cloud unit Azure as sales in the personal computer segment have dipped, hurting revenues from Windows and device sales. The company started making smaller changes to the organizational structure, which saw some of the roles being eliminated in July and October. In all, 2,000 employees had lost their jobs as Microsoft eliminated open positions and halted hiring.

However, Microsoft had held back on announcing a major layoff late last year, even as other tech companies did. Now, reports suggest that Microsoft could be looking to trim its workforce in the engineering division and human resources. Microsoft could be looking to lay off as many as five percent people of its 221,000-strong workforce, affecting 11,000 employees.

As per last year's filings, as many as 122,000 of its employees are based in the U.S., while the remaining 90,000 are in other locations. It is unclear if the job cuts will be applied equally across all locations.

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Nadella joins the chorus

Although Microsoft is yet to make a formal statement about the layoffs, these were expected after CEO Satya Nadella warned of "sustained turbulence." In an interview with an Indian media outlet, Nadella said that he expected the next two years to be most challenging. After acceleration during the pandemic, the tech industry was now going through normalization of demand, and along with the recession in large parts of the world, adjustments needed to be made.

Other technology majors, such as Meta, announced layoffs last year, with 11,000 employees facing the axe. E-commerce giant Amazon, which expected to lay off 10,000 employees last year, is now looking at 18,000 job cuts instead.

Google-parent Alphabet is also looking to slash as many as 10,000 jobs after revenues from advertising dipped in the latter half of 2022. Twitter may take the top spot for the percentage of employees that have been fired from a company, but that could change as well.

Microsoft's layoffs suggest that there could be more job cuts in the tech industry, and the grim situation is far from over.