Microsoft has confirmed plans to lay off approximately 10,000 employees.
The staff cuts will hit around 4.5% of the US technology giant’s 220,000-person workforce.
Microsoft said the layoffs will take place by the end of its third fiscal quarter on March 31, 2023.
Some Xbox and Bethesda employees are affected by the layoffs, it’s been confirmed.
Alongside the jobs cuts Microsoft said it will also make changes to its hardware portfolio and lease consolidation to create higher density across its workspaces.
The company said these actions were being taken “in response to macroeconomic conditions and changing customer priorities”.
Microsoft’s didn’t immediately identify which areas of the business will be impacted by today’s announcements, although it was reported on Tuesday that the company intended to cut jobs in a number of engineering divisions.
VGC has contacted Xbox to see if the gaming division will be impacted by today’s announcements.
Microsoft will report its second quarter earnings on January 24. Collectively it said the actions announced on Wednesday will result in a charge of $1.2 billion in the quarter.
Today’s news comes against the backdrop of Microsoft’s battle to gain regulatory approval for its proposed $68.7 billion acquisition of Call of Duty owner Activision Blizzard, which it hopes to complete by the end of its current fiscal year in June. Should it go through, the deal would be by far the biggest in the company’s history.
“These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts,” Microsoft CEO Satya Nadella wrote in a message sent to employees on Wednesday.
He added: “We’re living through times of significant change, and as I meet with customers and partners, a few things are clear First, as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.
“We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.”
Microsoft said US employees impacted by the job cuts who are eligible for benefits will receive above-market severance pay, continuing healthcare coverage and vesting of stock awards for six months, career transition services, and 60 days’ notice prior to termination. Benefits for staff outside the US will align with the employment laws in each country.
“When I think about this moment in time, the start of 2023, it’s showtime—for our industry and for Microsoft,” Nadella said. “As a company, our success must be aligned to the world’s success. That means every one of us and every team across the company must raise the bar and perform better than the competition to deliver meaningful innovation that customers, communities, and countries can truly benefit from. If we deliver on this, we will emerge stronger and thrive long into the future; it’s as simple as that.”
Microsoft also laid off around 1,000 employees across the company, including staff working for its Xbox division, in October 2022.