Report: Microsoft plans to lay off as many as 11,000 people Wednesday

Microsoft appears set to be the next tech giant to slash its workforce in anticipation of a global economic slowdown.

Several reports, from Bloomberg, Reuters, and others, say the company plans to cut thousands of jobs in a retrenchment. Sky News reports the layoffs will amount to roughly 5% of Microsoft’s workforce, which works out to approximately 11,000 positions.

Microsoft declined to comment on the reports. 

This round of cuts would be significantly larger than last year’s staff reductions at Microsoft. In those cuts, which took place in October and July, 1% of the workforce (roughly 2,000 people) lost their jobs. The company has also eliminated open positions and halted hiring.

Microsoft had 221,000 full-time employees as of June 30 last year. Some 122,000 of those were in the United States, and 99,000 were located in other areas of the world.

Unlike several other tech giants, Microsoft, until now, has resisted large-scale layoffs. Earlier this month, though, CEO Satya Nadella warned of sustained turbulence in the tech sector, telling India’s TV18, “The next two years are probably going to be the most challenging. We did have a lot of acceleration during the pandemic, and there’s some amount of normalization of that demand. And on top of it, there is a real recession in large parts of the world. . . . We will have to adjust.”

The company is hardly alone. Meta laid off 11,000 workers last year in the first broad workforce reduction at the social media giant. And Amazon’s recent layoffs will result in 18,000 employees losing their jobs. Salesforce laid off roughly 8,000 people in late October. And Snap cut its staff by 20%, leaving 1,200 people out of work.

Many other tech firms have cut staff recently, including Lyft, Redfin, and Twitter. All total, 153,160 tech workers from 1,172 tech companies lost their jobs last year, according to Layoffs.fyi, which tracks corporate layoffs and dismissals. That’s more than twice the number who were laid off between March and December of 2020, when 70,000 positions were eliminated.

And Microsoft’s cuts may not be the last. Google parent company Alphabet last week terminated more than 200 employees at Verily Life Sciences, its healthcare unit, as part of a broader reorganization, which is not expected to be the end.

Alphabet had 186,779 employees at the end of September last year—and when CEO Sundar Pichai was asked about layoffs at a companywide meeting in December, he dodged the question, saying he couldn’t make any forward-looking statements.

Employees at the company, though, are scared. In December, the New York Times reported mounting concern about a new performance evaluation system at the company. Some question whether it will be used to accelerate job reductions; with the bottom 6%, which works out to 11,000 people, could be cut. 

Microsoft’s cuts are expected to take place in the engineering divisions, according to Bloomberg. But other units could be affected as well.

The company is scheduled to report quarterly earnings on January 24 and has been under pressure from investors to show growth in its Azure cloud computing unit, as personal computer sales have slowed considerably in the past year.