Microsoft will cut 10,000 positions and deduct US$1.2 billion (A$1.7 billion) from earnings as its cloud computing clients review their expenditure and the business prepares for a possible downturn.
The job cuts, which are far higher than those made by Microsoft last year, are in addition to the tens of thousands already lost in the IT industry, which has slowed down after experiencing rapid development during the pandemic.
The announcement comes as the software developer plans to increase investment in generative artificial intelligence, which the market views as the new growth area.
CEO Satya Nadella attempted to address the conflicting reality in a letter to the staff.
The reductions are a result of broader budget cuts in the IT industry.
According to outplacement company Challenger, Gray and Christmas, over 97,000 job layoffs were reported in 2022, the most in the industry since 131,294 cuts were declared in 2002.
The extent of personnel reductions extends beyond enterprise IT to ad-based business and the consumer internet, with 11,000 cuts made at Facebook parent Meta Platforms.
Reducing cloud spending was one of his customers’ top ten priorities, Palantir Technologies Inc.’s CEO, who also runs a business that caters to companies, told Reuters this week.
According to Nadella, severance costs, modifications to Microsoft’s hardware range, and lease consolidation to construct higher-density workspaces are all contributing factors in the billion-dollar change.
Microsoft opted not to go into specifics about the hardware changes or to confirm whether it will be discontinuing any product lines.
After a pandemic boom dissipated, the business struggled with a fall in the personal computer industry, which left little demand for its Windows software and ancillary items.
