A wave of layoffs continues to sweep through the tech industry. After Twitter and Amazon, Microsoft is now laying off thousands of employees. Inflation and the weakening economy are the reasons.

The wave of layoffs in the technology world has reached Microsoft: The software giant announced major job cuts as another heavyweight in the industry. Microsoft plans to lay off around 10,000 employees by the end of March. That is less than five percent of the workforce, as the US group emphasized on Wednesday.

Wave of layoffs at tech companies: Microsoft cuts 10,000 jobs

The layoffs come as no surprise, as US media had already reported on them in advance. Microsoft boss Satya Nadella justified the job cuts in the company blog as a cost-cutting measure: “We have to bring our cost structure into line with our sales”. Nadella stressed, however, that the job cuts would also be matched by hiring and investment in areas of critical strategic importance. Under his leadership, Microsoft is increasingly focusing on the cloud business with online services.

Nadella did not specify which areas will be specifically affected by the job cuts. He promised affected employees that management would proceed as “considerately and transparently” as possible with the layoffs. Such decisions are “difficult but necessary,” he wrote. In the fall, Microsoft had already cut jobs. At the end of the past financial year in mid-2022, the number of employees had risen by a good fifth to 221,000.

Even if the job cuts are intended to save money in the long term, layoffs and severance payments initially place a high burden on Microsoft. In a mandatory notification to the US Securities and Exchange Commission, the group announced that the layoffs and other measures to restructure the group would initially result in balance sheet charges of $1.2 billion (€1.1 billion). Microsoft plans to publish its figures for the past second quarter on January 24th.

After an upswing during the corona pandemic: the job boom came to an abrupt end

The layoffs at the Windows group once again illustrate the abrupt end of the job boom in the tech industry. After business flourished during the pandemic, the current market environment, which is characterized by fears of inflation and recession, is giving many companies a hard time. Tech stocks are particularly under pressure on the stock exchange – the Nasdaq index fell by 33 percent last year.

The number of companies announcing layoffs has recently become longer and longer. For example, there were job cuts at the Facebook, Whatsapp and Instagram mother Meta and at the online network Twitter, which was taken over by Tesla boss Elon Musk. Meta laid off around 11,000 employees in the fall – around 13 percent of the workforce. On Twitter, Musk had around half of the approximately 7,000 jobs cut as a cost-cutting measure. Then more employees left. The world’s largest online retailer Amazon announced at the beginning of the year that it would cut 18,000 of its approximately 1.5 million jobs. With around 8,000 jobs, the SAP competitor Salesforce is cutting back on about a tenth of its workforce.