Layoffs at Microsoft: Big layoffs are reportedly coming

New York/London

Microsoft ( MSFT ) could announce thousands of job cuts on Wednesday, according to multiple news reports, potentially becoming the latest technology company to shed its workforce as the global economy slows.

Sky News, without citing sources, reported that the layoffs will affect approximately 5% of the company’s workforce. Microsoft employs 221,000 people worldwide, including 122,000 in the United States.

The software company plans to cut jobs in a number of engineering departments, according to Bloomberg. who quoted a person familiar with the matter. The Wall Street Journal, also citing a person familiar with the matter, said the layoffs could be announced as early as Wednesday. Microsoft declined to comment on the reports.

Speaking at the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, Microsoft CEO Satya Nadella said the company is not immune to a weaker global economy.

“Nobody can defy gravity and gravity here is inflation-adjusted economic growth,” he told VEF founder Klaus Schwab in a live discussion.

A number of tech companies have made deep cuts to their workforces since the start of the year, as inflation weighs on consumer spending and rising interest rates cut funding. Demand for digital services during the pandemic has also weakened as people return to their offline lives.

Nadella said there would be a “normalization” of demand after rapid growth during the pandemic, which would require the tech industry to be more efficient.

“We will have to do more with less,” he added.

Amazon ( AMZN ) announced plans to lay off 18,000 people, and Salesforce said it was laying off 10% of its staff. Facebook (FB) parent company Meta also recently announced 11,000 job cuts, the largest in the company’s history. In October, Akios reported that Microsoft had laid off fewer than 1,000 employees across several divisions.

Tech CEOs from Meta’s Mark Zuckerberg to Salesforce’s Marc Benioff blamed themselves for over-hiring early in the pandemic and misreading how rising demand for their products would cool once Covid-19 restrictions eased.

Although the overall labor market remains tight, layoffs in the tech sector are growing at a staggering rate. A recent report by recruitment firm Challenger, Gray & Christmas found that tech layoffs are up 649% in 2022 compared to the previous year, compared to just a 13% increase in layoffs in the overall economy over the same period.

Microsoft will announce its second quarter earnings on January 24. Software company Azure’s cloud computing business led to revenue growth in the three months to September, as sales in its PC division fell slightly.

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