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Layoffs at Microsoft: big job cuts are to come


New York/London
CNN

Microsoft

(MSFT)
could announce thousands of job cuts on Wednesday, according to multiple reports, potentially becoming the latest technology company to eliminate its workforce as the global economy slows.

Sky News, without citing sources, said the layoffs would affect around 5% of the company’s workforce. Microsoft employs 221,000 people worldwide, including 122,000 in the United States.

The software company plans to cut jobs in a number of engineering divisions, according to Bloomberg, which quoted a person familiar with the matter. The the wall street journal, also citing a person familiar with the matter, said the layoffs could be announced as early as Wednesday. Microsoft declined to comment on the reports.

Speaking at the World Economic Forum (WEF) in Davos, Switzerland on Wednesday, Microsoft CEO Satya Nadella said the company was not immune to a weaker global economy.

“No one can defy gravity and gravity here is inflation-adjusted economic growth,” he told WEF founder Klaus Schwab in a live chat.

Several technology companies have significantly reduced their workforce since the start of the year, as inflation weighs on consumer spending and rising interest rates reduce funding. Demand for digital services during the pandemic has also declined as people return to their offline lives.

Nadella said there would be a “normalization” in demand following rapid growth during the pandemic, which would force the tech industry to be more efficient.

“We will have to do more with less,” he added.

Amazon

(AMZN)
announced plans to lay off 18,000 people and Salesforce said it was cutting 10% of its workforce. Facebook

(FB)
Parent company Meta also recently announced 11,000 job cuts, the largest in the company’s history. In October, Axios announced that Microsoft had laid off fewer than 1,000 employees across multiple divisions.

Tech CEOs from Meta’s Mark Zuckerberg to Salesforce’s Marc Benioff have blamed themselves for over-hiring at the start of the pandemic and misinterpreting how a surge in demand for their products would cool once Covid-19 restrictions eased.

While the overall labor market remains tight, layoffs in the tech sector have increased at a staggering rate. A recent report by outplacement firm Challenger, Gray & Christmas found that layoffs in the tech sector rose 649% in 2022 from a year earlier, compared to a rise of just 13% in layoffs. employment in the overall economy over the same period.

Microsoft will announce its second quarter results on January 24. The software maker’s Azure cloud computing business drove revenue growth in the three months to September, as sales in its personal computing division fell slightly.

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