Microsoft Lays 10,000 People. Cuts Include Xbox and Bethesda

Microsoft is cutting additional jobs this week. Satya Nadella the CEO confirmed 10,000 layoffs during “times of significant changes.” These job losses are expected to affect Bethesda employees as well, and other Microsoft-related teams.

Nadella informed staff that the 10,000 layoffs, which amount to less than 5 percent of the company’s workforce of over 220,000, will take place from today, January 18, to the end of the third quarter of fiscal 2023. The New York Times reports that Microsoft has employed more than 75,000 people to meet the demand for online services and cloud computing since 2019.

This is not the first round of Microsoft layoffs. Nadella, who resigned from Nokia in 2014 and 2015, has eliminated approximately 25,000 jobs.

“It is important to remember that we will continue to recruit in strategic areas even though we are eliminating some roles. This is an extremely difficult time for everyone affected. Nadella stated that the senior leadership team and myself are committed to ensuring that we navigate this process in the most thoughtful, transparent and honest manner possible.

Although the CEO didn’t specify which Microsoft departments were affected, Bloomberg reported that Microsoft’s Xbox division and Bethesda division are affected.

Nadella explained that the job losses were caused by Microsoft making changes to its business to address the pandemic, the looming recession fears and advances in AI technology.

We saw customers increase their digital spending during the pandemic. Now, we are seeing them optimize their digital spending to do more with less. He said that organizations across all industries and geographies are being cautious because some regions of the world are currently in recession while others are anticipating one. “At the same time, the next major wave of computing is being born with advances in AI, as we’re turning the world’s most advanced models into a new computing platform.”

Nadella expressed confidence that Microsoft would “emerge stronger and more compliant”

Nadella explained that Microsoft will make “strategic investments” to support future growth. AI will be one of these pillars. The company will also “divest” in other areas.

Nadella said, “These are hard choices that we have made in our 47-year career to be a consequential company in an industry that is difficult to adapt to platform shifts.”

Microsoft will be charged $1.2 billion for severance costs and “changes in our hardware portfolio” as well as “costs of lease consolidation, as we create greater density across our workspaces.”

Nadella called the job cuts “difficult but necessary.” Nadella stated that affected employees will be provided with Microsoft’s full support, which includes “above market” severance and healthcare for six month, continuing vesting of stock options for six months, career services and transition services. He also said that Microsoft will provide 60 days notice to those who have not been notified. This applies to Microsoft workers within the US. The benefits for affected workers in the US are aligned to local employment laws.

Microsoft posted a $50.1 billion increase in revenue and a $17.6 billion profit for the quarter. (This was down 11%).

Microsoft is expected to invest $10 Billion in OpenAI, and it continues to pursue Activision Blizzard’s acquisition for $68.7 Billion.