Microsoft is the latest technology giant to lay off scores of employees as the entire sector continues to restructure itself in the name of profitability over growth.
Microsoft CEO Satya Nadella announced that the company will lay off approximately 10,000 employees, beginning Wednesday. The layoffs, which will be completed by the end of Q3, will represent a bit less than five percent of the company’s workforce.
Nadella said that affected employees will receive “above-market severance pay, continuing healthcare coverage for six months, continued vesting of stock awards for six months, career transition services and 60 days’ notice prior to termination, regardless of whether such notice is legally required.”
Microsoft is a video game giant, owning the gaming platform Xbox and studios like Bungie and games like Minecraft. It is also in the midst of a proposed $69 billion purchase of Activision Blizzard, which is facing regulatory opposition.
Microsoft is also seeking to become a major player in advertising and is Netflix’s global ad sales and technology partner.
In his memo, Nadella outlined the rationale for the cuts, hitting similar themes to other CEOs over the last few months.
“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,” he wrote. “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. At the same time, the next major wave of computing is being born with advances in AI, as we’re turning the world’s most advanced models into a new computing platform.”
Microsoft is just the latest tech giant to cut back. Amazon said earlier this month it would cut 18,000 employees, while Facebook and Instagram owner Meta announced plans to cut 11,000 employees last year. Snap, Twitter and Netflix also made significant cuts last year.
But Nadella also sought to rally the troops as the company moves forward.
“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.”
Read Nadella’s memo on THR.com