We can’t defy gravity, says Microsoft as it lays off 10,000

MICROSOFT is to cut 10,000 jobs in the face of a global economic downturn, with chief executive Satya Nadella saying the technology giant cannot “defy gravity”.

The layoffs represent just under 5pc of Microsoft’s global headcount and mean the company joins a growing group of big tech companies making deep job cuts. Industry data show that technology companies laid off more than 150,000 people last year.

Mr Nadella said the cuts were “difficult, but necessary” as the economy slowed and demand for tech products cooled. He added the tech industry was “unforgiving to anyone who doesn’t adapt”. He wrote in a memo to staff: “Every one of us and every team across the company must raise the bar.”

Speaking at the World Economic Forum in Davos ahead of the announcement, Mr Nadella said that the company needed to react to the gloomy economic situation.

Mr Nadella said: “At the end of the day, all of us are governed by what is happening in the world.

“Because no one can defy gravity, and the gravity here is inflationadjusted economic growth. All [across] the world it’s been pretty weak.”

Microsoft said it would take a $1.2bn (£1bn) charge to pay severance packages and reorganise its devices division.

The company added 75,000 staff between 2020 and 2022 as technology companies across the industry invested heavily in anticipation of continued growth. Microsoft in particular benefitted from booming interest in its Office products and Teams video-calling app as companies switched to working from home during the pandemic.

However, the move to hybrid working, or a return to the office altogether, has curtailed this momentum.

Shares in Microsoft have fallen by about 20pc over the past 12 months, although the decline has not been as sharp as the losses at its rivals such as Google, Facebook and Amazon.

The so-called “Gamma” companies – Google, Amazon, Meta, Microsoft and Apple – have now let go of 39,000 staff between them over the past 12 months. Only Google and Apple have yet to confirm widespread layoffs.

Yesterday, Amazon began informing 18,000 staff from different divisions that they would lose their jobs. The cuts are expected to fall most heavily on its hardware division, stores team and human resources functions.

In November, Facebook owner Meta said it would cut 11,000 roles. Other tech giants have made cutbacks. Salesforce said it would axe 8,000 staff earlier this month, while Twitter has laid off more than half of its 7,500 staff since Elon Musk’s takeover in October.