Software giant Microsoft has announced it is cutting 10,000 jobs, or approximately 5 per cent of its workforce, in response to "macroeconomic conditions and changing customer priorities".
The news makes Microsoft the latest company in a line of technology giants to announce layoffs as the global economy slows down. These include household names like Amazon, Apple, Meta and Twitter.
Microsoft employees were notified on Wednesday in a regulatory filing, though there was already talk of looming job cuts. Some of the layoffs were effective immediately.
“While we are eliminating roles in some areas, we will continue to hire in key strategic areas,” CEO Satya Nadella said in an email to employees.
He emphasised the importance of building a “new computer platform” using advances in artificial intelligence (AI) and a service offering OpenAI's futuristic chatbot ChatGPT.
"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," he said.
Nadella said customers that were accelerating their spending on digital technology during the pandemic are now trying to “optimise their digital spend to do more with less”.
“We’re also seeing organisations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one,” he wrote.
Microsoft, which employs more than 220,000 people, said it would also be making changes to its hardware portfolio and consolidating its leased office locations.
As with many of the main big tech companies, Microsoft boomed throughout the pandemic. But business is slowing on a global scale with the cost of living crisis squeezing consumers' budgets.
The announcement about headcount reductions comes ahead of an investor update next Tuesday (January 24), when Nadella will deliver a review of the company's financial performance to its main investors.