On Wednesday 18 January, Microsoft laid off 10,000 employees – with departments such as marketing, advertising, recruiting and gaming affected. These redundancies are part of Microsoft’s plans to cut spending in an economically uncertain environment.
Microsoft became the latest technology conglomerate to announce mass layoffs, following similar steps by Amazon, Meta and Twitter in recent months.
On the same day, CEO of Microsoft Satya Nadella noted that this decision was driven by the decline in consumer spending after the rise they experienced during the pandemic, with recessions in various markets furthering the decision as well.
Further, Microsoft Corporate released a blog post detailing their short-term and long-term plans that involve these redundancies. Within the post, Satya mentioned that right now Microsoft is focusing on aligning its cost structure with its revenue and customer demand. He also acknowledges that this is a challenging time for everyone impacted.
Impact of the Redundancies
At this time, it is not clear yet how many UK employees of Microsoft will be affected. However, they have established that the redundancies will affect less than 5% of Microsoft’s global workforce. They have also noted that job cuts are expected to be completed by the end of March.
In the UK, the Office for National Statistics (ONS) reported an increase in unemployment rates – also reporting a redundancy rate of 3.4 per 1,000 employees between September – November 2022. These numbers may be affected by the expected Microsoft redundancies.
Rising costs and inflation have prompted layoffs for many companies in many sectors. The tech sector has been notably affected, with giants such as Amazon, Meta and Twitter all announcing redundancies due to the current economic downturn.
According to Business Today, several game development studios under Microsoft were the ones mostly affected by the layoffs. Games such as Halo and the Coalition are reportedly affected by staff restructuring and the elimination of roles.
However, it is noted that Microsoft will continue to be hiring in strategic areas within the Company. Currently, Microsoft has vacancies in various technical roles across many products – such as Microsoft 365, Azure and Teams.
Criticism Amidst the Layoffs
Many are criticising Microsoft as they announced these redundancies the day after the company hosted an exclusive party in Davos that featured a live performance by Sting. It is not known how much money was spent on the party, but many are questioning the decision as they announced layoffs due to cost restructuring the following day.
This can be deemed as insensitive towards the affected employees, with Rita Gunther McGrath – author and professor at Columbia Business School – calling it “bad executive symbolism” in a tweet commenting on the layoffs.
It truly has been a difficult decision for Microsoft to make, knowing that the economic downturn also affects individuals who are working for them. However, even if the decision was necessary, it is best for companies to make sensible corporate movements in a heated climate where many are losing their livelihoods when they are facing rising living costs.