Microsoft announces the layoff of around 10,000 employees by the end of March

US IT giant Microsoft, citing economic conditions and shifting customer priorities, announced on Wednesday (January 18th) that it would lay off around 10,000 employees by the end of March. This decision shakes a little more a sector already affected by several major social plans.

The company, which is laying off a little less than 5% of its workforce, also plans to modify its portfolio of IT equipment and reduce the number of workspaces.

These savings measures will represent a charge of 1.2 billion dollars in the accounts for the staggered second quarter that the group must reveal on January 24. Its turnover is expected to increase by only 2.7% over one year, a very low rate for the IT giant accustomed to double-digit growth.

In a letter to employees made public, Microsoft boss Satya Nadella explains that while “customers have accelerated their IT spending during the pandemic”, they are now looking to optimize it to “do more with less”.

Artificial intelligence is shaking up the sector

Companies around the world are also showing “caution” in the face of recession risks as advances in artificial intelligence shake up the sector. Microsoft had initially resisted thanks to the dynamism of remote computing (cloud), but companies have tended to limit their investments for several months for fear of a deterioration in the economy.

Other major groups in the tech sector have announced workforce reductions in recent months, such as Amazon and Salesforce, which announced in early January the layoffs of around 18,000 and 8,000 employees respectively.

Third round of layoffs at Microsoft

Meta, the parent company of Facebook and Instagram, also launched a social plan in November affecting 11,000 posts. Microsoft had already carried out two rounds of layoffs, one in July, which according to the company concerned less than 1% of the workforce. The second took place in October and targeted less than 1,000 people, according to the Axios news site.

Microsoft, which according to its site currently has 221,000 employees worldwide, had hired 75,000 since 2019, recalls Dan Ives, from Wedbush, in a note. These dismissals are not a “surprise” in his eyes.

The group “will continue to spend strategically on cloud, mergers and acquisitions (Activision), betting on innovation (ChatGPT), and continue to accelerate on innovation while reducing non-strategic areas (hardware, etc. )”, predicts the analyst.

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