When Microsoft announced We were laying off 10,000 employees this week, which wasn’t too much of a shock. Other big companies, including Salesforce, Amazon and Meta, have already gone that route, with news leaking widely ahead of Wednesday’s official announcement. Alphabet joined today, announcing another 12,000 job cuts.
Like these other companies, Microsoft is facing changing economic conditions and adjusting its reinforced workforce in the early days of the pandemic. Each of these companies added tens of thousands of employees to their paychecks, but due to the current economic uncertainty, they decided to adjust (or at least use it as an excuse to cut costs). To do).
According to Statista, Microsoft had over 220,000 employees at the end of last year. This is up from 163,000 in 2020 and 181,000 in 2021. That means in two years he added 57,000 employees before the company cut 10,000 this week.
It’s not clear where the cut came from, and there’s been no official announcement from Microsoft. Bloomberg reports that the engineering group will be cut, while the HoloLens group has been hit hard after losing a major defense contract. Geekwire reported that the Nokia group has had big cuts. Microsoft did not comment when TechCrunch was asked where the cuts were made.
The layoffs mean less financial strain for Microsoft, but they have a much bigger impact on the 10,000 people who were said to be laid off this week.
Microsoft isn’t doing badly, making over $200 billion last year, and gaming company Activision Blizzard paid out $69 billion almost a year ago. Today, the company’s market capitalization is over $1.7 trillion, which is marked with a T. In filings with the U.S. Securities and Exchange Commission reporting the layoffs, the company indicated that it would write off his $1.2 billion in costs related to the layoffs in his second. quarter.
All of this is to say that the layoffs represent a bucket drop in Microsoft’s financials, but they have a very real impact on the 10,000 people they were told will be laid off this week. If it was meant to impress, it hasn’t worked so far — shares fell in the days following the announcement before rebounding on Friday.
With all these financial resources, the question is whyWhat does Microsoft gain by cutting its workforce by 5%? We spoke to a few analysts to try to make sense of it.
pretty good year
First, let’s take a quick look at Microsoft’s financial situation. Companies typically cut costs as businesses no longer support their workforce, but Microsoft had a pretty decent year, as the chart below shows.
