Microsoft to axe about 5% of global workforce by Q3 FY23 over poor economy

Tech giant Microsoft on Wednesday said that it will axe 10,000 employees, almost 5% of its workforce, by the end of third quarter of fiscal 2023 over poor economy.

The Satya Nadella-led firm said in a regulatory filing that had just notified employees of the layoffs, some of which begin immediately.

The layoffs and costs related to hardware-portfolio and other changes will result in a charge of $1.2 billion in the second quarter of fiscal 2023, representing a negative impact of 12 cents on per share profit, Microsoft said.

In a note to staff, Microsoft Chief Executive Satya Nadella said customers wanted to "optimize their digital spend to do more with less" and "exercise caution as some parts of the world are in a recession and other parts are anticipating one."

The layoffs represent “less than 5 percent of our total employee base, with some notifications happening today,” Nadella said.

‘Will continue to hire in key strategic areas’

Microsoft said that the company will continue to hire in key strategic areas while it will eliminate roles in some areas as the company looks to reduce its workforce.

“While we are eliminating roles in some areas, we will continue to hire in key strategic areas,” Nadella said. He emphasized the importance of building a “new computer platform” using advances in artificial intelligence.

The cuts were "in response to macroeconomic conditions and changing customer priorities," the maker of the Windows operating system said.

In July 2022, Microsoft said that a small number of roles had been eliminated, while news site Axios in October reported that the company had laid off under 1,000 employees across several divisions.

The company is also grappling with a slump in the personal computer market after a pandemic boom fizzled out, leaving little demand for its Windows and accompanying software.