The crisis in Silicon Valley is only getting worse as Microsoft has become the latest tech firm to cut jobs. As per reports, the company plans to lay off five percent of its workforce, especially in human resources and engineering divisions.
Though Microsoft is yet to make any public statement in this regard, Bloomberg News has reported that the company could announce layoffs from Wednesday.
Further reports estimate that as many as 11,000 roles could be cut, which is 5% of its workforce. The firm could also lay off recruiting staff by as much as one-third. The company currently employs over 220,000 employees.
Last year too, Microsoft had resorted to job cuts twice. While it cut some jobs in June, it followed with another round of jobs cuts in a month. Over 200 were fired then. The company had also slowed the hiring process as it battled severe economic crisis.
Fighting crisis
A few days ago, as part of its policities to mitigate crisis, Microsoft had implemented a new unlimited time off policy. This means that the employees that have an unused vacation balance will get a one-time payout in April, and managers will be able to approve unlimited 'Discretionary Time Off.'
In a recent interview, Microsoft CEO Satya Nadella had warned of the recession, stating Microsoft wasn’t "immune to the global changes" and spoke of the need for tech companies to be efficient.
"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 some parts of the world," Nadella told CNBC.
This makes Microsoft the latest among the big stalwarts to initiate job cuts. While Amazon announced in early January that it plans to cut more than 18,000 jobs from its workforce, software giant Salesforce said it planned to lay off 10 percent of its work force due to concerns about the economy.
Meta announced in November the loss of 11,000 jobs, or about 13 percent of its workforce. Snapchat let go about 20 percent of its employees, around 1,200 people in August. Twitter too fired about half of the social media platform's 7,500 employees.
Los Angeles-based private investment firm Wedbush in a statement to investors said staff cuts of another 5 to 10 percent is expected across the tech sector. "Over the last few weeks we have seen significant headcount cut reduction from stalwarts Salesforce and Amazon. Many of these companies were spending money like 1980's Rock Stars and now need to reign in the expense controls ahead of a softer (macro-economic conditions)," Wedbush analyst Dan Ives said in a note to investors.
