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Microsoft joined the layoff parade. Did it really have to? • TechCrunch

When Microsoft announced this week when it laid off 10,000 workers, it wasn’t exactly a shock. Other major companies, including Salesforce, Amazon, and Meta, have already gone down that path, and the news leaked far and wide before the official announcement on Wednesday. Alphabet today joined the announcement of another 12,000 job cuts.

Like these other companies, Microsoft is facing a changing economic landscape and needs to adjust the workforce that was pumped up after the early days of the pandemic. Each of these companies added tens of thousands of employees to the payroll, and with the current economic uncertainty, they decided to reverse it (or at least use it as an excuse to cut costs).

Recall that Microsoft had more than 220,000 employees at the end of last year, according to Statistics. That’s up from 163,000 in 2020 and 181,000 in 2021, meaning the company added 57,000 employees over a two-year period before cutting 10,000 this week.

It’s not clear where the cuts are coming from, and there’s no official word from Microsoft. That reports Bloomberg technical groups would be dropped while reporting it the HoloLens group got a hit after losing one major defense contract. Geekwire reported that there were major cutbacks to the Nokia group. Microsoft declined to comment when asked by TechCrunch where the cuts took place.

This layoff is a financial shock for Microsoft, but it has a very real impact on the 10,000 people who were told this week that they would be laid off.

Microsoft isn’t exactly doing badly, making more than $200 billion last year while pledging $69 billion almost exactly a year ago to pay for gaming company Activision Blizzard. Today it has a market cap of over $1.7 trillion – that’s with a T. In a Submit with the US Securities and Exchange Commission reporting the layoffs, the company indicated it will write off $1.2 billion in costs related to the layoffs in the second quarter.

All of this is to say that this layoff is a financial shock for Microsoft, but it has a very real impact on the 10,000 people who were told they would be laid off this week. If it was to impress investors, it’s not working so far – the stock fell in the days following the announcement before recovering on Friday.

With all those financial resources, the question is Why. What does Microsoft gain by cutting headcount by 5%? We spoke to a few analysts to find out.

A pretty good year

First, let’s take a look at Microsoft’s finances. Companies usually cut costs because the company no longer supports the workforce, but Microsoft has had a pretty good year, as the chart below shows:

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