Microsoft may cut about 5% of the staff, the news channel Sky News reported. Since the company employs over 220 thousand people, layoffs will affect approximately 10-11 thousand employees. An Insider source said it could even be about a third of the state.
It is unknown when the decision will be announced. Sky News believes this will happen before the report to investors scheduled for January 24, 2023. According to The Verge and Bloomberg sources familiar with the firm’s plans, the news will appear on January 18.
First of all, layoffs may affect engineering teams, Bloomberg writes, citing sources. The rest of the media did not give details.
In May 2022, Microsoft announced that it had slowed down the pace of hiring, and in July that it would lay off less than 1% of staff. In August, the media reported that the company called for reducing employee costs, training and corporate events. According to Insider, salaries in offers for new specialists were cut by 30%. In October, the publications wrote about the next cuts of 1,000 people.
In January 2023, the head of the company Satya Nadella warned that the tech industry is waiting for two years of “challenges”, and noted: Microsoft is also not immune from global shocks and, like other technology firms, must “be effective.”
Later, the company announced unlimited vacations for full-time employees in addition to paid holidays and sick leave. But the decision was criticized in the industry, saying that it was “a trick to pay less.”
According to analysts, the company’s sales growth for the second quarter of the fiscal year, which it will report on January 24, will be 2%: this is “the slowest increase in revenue” since 2017, Bloomberg notes. The development of its cloud division has also slowed down.
Other IT sector firms are also trying to control costs amid financial problems. Amazon announced the cuts of 18 thousand employees, and Meta* — 11 thousand. In Salesforce, it was about 7000 employees, in Robinhood — about 23% of the staff, on Twitter — about 50%, in Oracle — about “hundreds” of people.