Refocussing on strategic priorities, such as artificial intelligence

United States-based technology company, Microsoft plans to lay off as many as 10,000 workers between now and March.

The company made the first round of layoffs yesterday (January 18), as part of its strategy to trim costs amid economic uncertainty while refocussing on strategic priorities such as artificial intelligence. The layoffs amount to less than five per cent of its global workforce.

Microsoft has become the latest tech giant to pull back on labour after a frenzied few years of hiring when the pandemic-fueled surge in online services and the expansion of cloud computing created fierce competition for tech talent. As at the end of June last year, Microsoft employed about 221,000 workers.

The layoffs, which will continue through March, represents the company’s largest staff cuts in roughly eight years. In a message to staff, Microsoft’s chief executive, Satya Nadella, said: “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.”

Continue to hire in strategic areas

Nadella disclosed that Microsoft will continue to hire in strategic areas, and called advances in artificial intelligence “the next major wave of computing”.

The company has been pursuing several expensive bets, including potentially putting another US$10 billion into its investment in OpenAI, which makes the explosively popular, ChatGPT artificial intelligence system, and a US$69-billion acquisition of the video game maker Activision that is facing challenges globally by antitrust regulators.

Other tech giants like Microsoft have also been reducing costs after several years of breakneck expansion. Amazon, for example, began what is expected to be a huge round of layoffs yesterday, as part of its plans to reduce its corporate workforce by about 18,000 jobs.

Business software company, Salesforce announced earlier this month that it plans to lay off 10 per cent of its workforce, or about 8,000 employees, while Meta, the parent company of Facebook, announced at the end of last year that it was cutting more than 11,000 jobs.

Microsoft’s annual revenue grew 58 per cent over three years but rising interest rates and the prospect of a recession have tempered the company’s outlook. In the quarter that ended in October, Microsoft reported its slowest growth in five years and warned that more tepid results could follow.

In a regulatory filing, Microsoft, which makes the Surface line of laptops and tablets, indicated some of the costs would come from making “changes to our hardware portfolio,” as well as consolidating office leases. Microsoft is scheduled to report its quarterly earnings on Tuesday.