When Microsoft introduced this week that it was shedding 10,000 staff, it wasn’t precisely a shock. Different massive corporations, together with Salesforce, Amazon and Meta, have already been down that highway, and the information leaked far and vast earlier than the official announcement on Wednesday. Alphabet joined in at the moment, saying one other 12,000 job cuts.
Like these different corporations, Microsoft is dealing with a shifting financial panorama and making changes to a workforce that was pumped up after the early days of the pandemic. Every of those corporations added tens of hundreds of staff to the payroll, and with the present financial uncertainty, they determined to dial it again (or no less than use it as an excuse to chop prices).
Take into account that Microsoft had over 220,000 staff on the finish of final yr, in response to Statista. That’s up from 163,000 in 2020 and 181,000 in 2021, that means the corporate added 57,000 staff in a two-year interval earlier than slicing 10,000 this week.
It’s not clear the place the cuts are coming from, and there was no official phrase from Microsoft. Bloomberg reported that engineering teams can be lower whereas additionally reporting that the HoloLens group took a success after dropping a massive protection contract. Geekwire reported that there have been massive cuts to the Nokia group. Microsoft wouldn’t remark when requested by robotechcompany.com the place the cuts had been happening.
This layoff represents a drop within the bucket for Microsoft financially, however it has a really actual impression on the ten,000 individuals who had been instructed they’d be let go this week.
Microsoft hasn’t precisely been doing poorly, incomes over $200 billion final yr whereas committing $69 billion to pay for gaming firm Activision Blizzard nearly precisely a yr in the past. At present, it has a market cap of over $1.7 trillion — that’s with a T. In a submitting with the U.S. Securities and Change Fee reporting the layoffs, the corporate indicated that it’ll write off $1.2 billion in prices associated to the layoffs within the second quarter.
All of that is to say that this layoff represents a drop within the bucket for Microsoft financially, however it has a really actual impression on the ten,000 individuals who had been instructed they’d be let go this week. If it was to impress buyers, up to now it’s not working — its inventory ticked down within the days following the announcement earlier than rebounding Friday.
With all of these monetary assets, the query is why. What does Microsoft achieve by slicing its workforce 5%? We spoke to some analysts to attempt to determine it out.
A reasonably good yr
First, let’s take a fast have a look at Microsoft’s financials. Firms normally lower prices as a result of the enterprise not helps the workforce, however Microsoft has had a reasonably respectable yr, because the chart under exhibits:
