Cuts in tech sector spread, Microsoft lays off 10,000

Microsoft is cutting 10,000 workers, almost 5% of its workforce, joining other tech companies that have scaled back their pandemic-era expansions.

The company said in a regulatory filing Wednesday that the layoffs were a response to "macroeconomic conditions and changing customer priorities."

The Redmond, Washingtonbased software giant said it will also be making changes to its hardware portfolio and consolidating its leased office locations.

Microsoft is cutting far fewer jobs than it had added during the COVID-19 pandemic as it responded to a boom in demand for its workplace software and cloud computing services with so many people working and studying from home.

"A big part of this is just overexuberance in hiring," said Joshua White, a finance professor at Vanderbilt University.

Microsoft's workforce expanded by about 36% in the two fiscal years following the emergence of the pandemic, growing from 163,000 workers at the end of June 2020, to 221,000 in June 2022.

The layoffs represent "less than 5 percent of our total employee base, with some notifications happening today," CEO Satya Nadella said in an email to employees.

"While we are eliminating roles in some areas, we will continue to hire in key strategic areas," Nadella said. He emphasized the importance of building a "new computer platform" using advances in* artificial intelligence.

He said customers that were accelerating their spending on digital technology during the pandemic are now trying to "optimize their digital spend to do more with less."

"We're also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one," Nadella wrote.

Other tech companies have also been trimming jobs amid concerns about an economic slowdown.

Amazon and business software maker Salesforce earlier this month announced major job cuts as they prune payrolls that rapidly expanded during the pandemic lockdown.

Amazon said that it will be cutting about 18,000 positions. It's the largest set of layoffs in the Seattle company's history, although just a fraction of its 1.5 million global workforce.