Microsoft confirmed on Wednesday it would cut 10,000 jobs by the end of the third quarter of fiscal 2023.
About 5% of Microsoft’s workforce—which numbers more than 220,000—will be affected by the latest layoffs. These layoffs also represent a considerable increase over Microsoft’s 1% employment reduction from the previous year.
“This represents less than 5 percent of our total employee base, with some notifications happening today. It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas,” CEO Satya Nadella said in a filing with the Securities and Exchange Commission (SEC).
This wave of job cuts is among the biggest Microsoft has ever seen, surpassing the 5,800 employees removed in 2009 and coming in second behind the 18,000 positions eliminated in 2014.
The company said layoffs and costs related to its hardware portfolio and other changes would result in a $1.2 billion hit in the second quarter of fiscal 2023, which would represent a negative $0.12 impact to diluted earnings per share.
In terms of severance, Microsoft said US-based employees would receive “above-market severance pay,” but did not specify what that meant. It also said that those affected will continue to receive health care for six months, career transition services, and 60 days notice of termination.
In a note to staff, seen by Reuters, Satya Nadella said customers wanted to “optimize their digital spend to do more with less” and “exercise caution as some parts of the world are in a recession and other parts are anticipating one.”
Microsoft said in July last year that a small number of roles were removed, while in October Axios reported that the company had laid off less than 1,000 employees across various divisions.