Microsoft is the latest Big Tech company to lay off workers amid rising economic uncertainty. According to Bloomberg, the Redmond firm is “realigning business groups and roles” following the end of its fiscal year (on June 30), despite plans to increase headcount in the coming months.
The layoffs are said to affect less than 1% of Microsoft’s 180,000-person workforce and have no discernible pattern in terms of geography or product division, affecting teams such as customer and partner solutions and consulting. They come after Microsoft slowed hiring in the Windows, Teams, and Office groups while assuring that industry headwinds had not affected recruitment.
“We had a small number of role eliminations today.” “Like all businesses, we evaluate our business priorities on a regular basis and make structural adjustments as needed,” Microsoft said in an emailed statement to Bloomberg. “In the coming year, we will continue to invest in our business and increase headcount overall.”
Microsoft reported strong earnings in the third quarter, with cloud revenue increasing 26 percent year over year and total revenue of $49.4 billion. However, the company revised its Q4 revenue and earnings guidance downward in early June, citing the impact of foreign exchange fluctuations.
According to Bloomberg, Microsoft has traditionally announced job cuts shortly after the July 4 holiday in the United States as it makes changes for the new fiscal year.
Layoffs in the technology sector have increased in recent months as investors, fearful of a recession, pull back. Startups, particularly those in capital-intensive industries such as delivery, events, and fintech, have been hit the hardest. However, as the unfavorable conditions persist, a ripple effect has occurred. Oracle, for example, is reportedly considering a $1 billion cost-cutting initiative that would result in thousands of layoffs.
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Aside from Microsoft and Oracle, Twitter laid off a third of its recruiting staff last week. Tesla has laid off hundreds of workers in the last month. And groups at Meta are bracing for layoffs after company managers were reportedly told to “move to exit” poor performers. Meta, which CEO Mark Zuckerberg believes is in the midst of “one of the worst downturns… in recent history,” previously announced a 30 percent reduction in its target number of new engineer hires this year.
Other publicly traded tech companies that have slowed hiring this spring and summer include Nvidia, Lyft, Snap, Uber, Spotify, Intel, Google, and Salesforce. So far, IBM and Amazon have not taken similar actions.