Microsoft is once again cutting thousands of jobs. CEO Satya Nadella confirmed a corresponding rumor on Wednesday. The first terminations were made on the same day; 10,000 Microsoft employees are said to have to go by the end of the quarter. That’s not quite five percent of the total workforce. After a rapid increase in staff in 2021, Nadella already initiated two waves of layoffs in the previous year.
“We will treat our people with dignity and respect and act transparently,” promises Nadella, who clearly distinguishes himself from the cruel and irrational behavior on Twitter. The decisions are “difficult but necessary”. Terminated Microsoft employees outside of the United States will receive what is legally due to them. Nadella offers US employees additional benefits, including “above market” severance pay, six-month rolling stock awards, career transition assistance and 60 days’ notice in states where it is not required by law.
Nadella expressed his heartfelt thanks to both the departing and the remaining employees for their achievements. Those who are allowed to stay must move closer together: Microsoft’s offices should be more densely occupied in the future. This allows Microsoft to cancel some leases, which also saves money in the long run.
It won’t be cheap
The layoffs are not across the board: in some areas, Microsoft is even hiring new staff. Namely where management expects long-term growth, which is particularly the case with artificial intelligence. Nadella notes that his clients have been lavish on digital services in recent years, but are now “optimizing” such spending. At the same time, the Indian quits in his blog post “Changes to our hardware offering” without being specific. So Microsoft is likely to phase out some devices, which explains some of the terminations.
Excerpt from Microsoft’s fiscal year 2022 report (ending June 2022). At that time, the group had 221,000 full-time equivalent jobs – at least 40,000 more than a year earlier.
Finally, Nadella prepares its shareholders for a less profitable quarterly result: $1.2 billion in severance payments and other termination-related expenses, lease termination costs and associated relocation costs, and depreciation of discontinued equipment. Microsoft shares were down about 1.25 percent on the NASDAQ on Wednesday.
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