Microsoft layoffs: 10,000 jobs cut, workforce urged to "perform better than the competition"

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Microsoft CEO Satya Nadella stressed on raising the bar, adding, "If we deliver on this, we will emerge stronger and thrive long into the future; it’s as simple as that."

After days of speculation, Microsoft has confirmed 10,000 layoffs, representing under 5% of the tech major's global workforce. This was shared in a message to employees dispatched by CEO Satya Nadella on 18 January 2023, the same day that some employees were notified on them being laid-off. The layoffs will go on till the end of Q3 FY2023.

Calling the decision "difficult, but necessary", CEO Nadella detailed a range of outplacement support for US-based employees. "U.S.-benefit-eligible employees will receive a variety of benefits, including 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."

No details were listed for non-US-based employees, apart from the following: "Benefits for employees outside the U.S. will align with the employment laws in each country."

Per the company's news page, Microsoft has a presence in 23 Asian markets with a team of "some 30,000 people" – across sales, marketing, operations, engineering, and developers, as well as two of its largest research centers outside the US located in China and India. Markets of operations include Hong Kong, Indonesia, Malaysia, Singapore, Thailand, and more.

As in the case of other tech-sector announcements, the development was linked to scaling up during the pandemic. "First, as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimise their digital spend to do more with less. We’re also seeing organisations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one," he explained.

He added: "This is the context in which we as a company must strive to deliver results on an ongoing basis, while investing in our long-term opportunity."

The layoffs and severance support are part of a three-priority strategy for the organisation to become more competitive. The third priority, Nadella wrote, is to continue to invest in strategic areas for the long-term, which means allocating both capital and talent to areas of "secular growth and long-term competitiveness for the company, while divesting in other areas".

Sharing that the industry "is unforgiving to anyone who doesn’t adapt to platform shifts", the CEO said Microsoft's books are taking a US$1.2bn charge in Q2 related to severance costs, changes to its hardware portfolio, and the cost of lease consolidation with the aim to create higher density across its workspaces.

"It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas," he wrote.

Concluding his message, Nadella thanked "everyone who has contributed to Microsoft up to this point and to all of you who will continue to contribute" for the focus, dedication, and resilience.

On the path forward, he shared: "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. 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."

Lead image / Richard Morgenstein, CC BY-SA 4.0 , via Wikimedia Commons (featuring Satya Nadella, CEO of Microsoft)