Microsoft to lay off 10,000 employees as revenue growth slows

Microsoft plans to lay off 10,000 employees by the end of the third quarter as its revenue growth slows. 

CEO Satya Nadella said in a blog post on Wednesday that the cuts represent almost 5 percent of Microsoft’s workforce. He said the layoffs are part of the company’s plan to align its “cost structure” with its revenue and where customer demand is. 

Nadella said customers accelerated their digital spending during the coronavirus pandemic but are now looking to optimize it to “do more with less.” He said the company will continue to hire in some key strategic areas despite the layoffs. 

“We know this is a challenging time for each person impacted,” he said. “The senior leadership team and I are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible.” 

Nadella said Microsoft is taking on a $1.2 billion charge in the second quarter of the fiscal year related to severance costs, hardware portfolio changes and the cost of consolidating leases. 

He said employees in jobs being eliminated will have Microsoft’s “full support” during the transition, and those eligible for U.S. benefits will receive severance pay above market value, continued health care coverage and vesting of stock awards for six months, career transition help and 60 days’ notice of losing their job. 

“As a company, our success must be aligned to the world’s success. 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,” Nadella said. 

“If we deliver on this, we will emerge stronger and thrive long into the future; it’s as simple as that,” he continued. 

Microsoft is the latest of several Big Tech companies that have laid off thousands amid slowing profits and concerns of a possible recession coming this year. 

Amazon has announced that it would lay off 18,000 employees, and Meta announced in November that it planned to lay off 11,000. 

The Associated Press contributed to this report.