Microsoft is laying off 10,000 employees

The Xbox manufacturer confirms the cuts are starting today

Microsoft is laying off 10,000 employees between now and the end of Q3 in fiscal year 2023. The cuts were announced today as part of a broader shift looking towards its future.

In a public letter from Microsoft CEO Satya Nadella, the reduction is confirmed to be “less than 5%” of Microsoft’s total employee workforce. The layoffs will happen between and now the end of Q3 2023, with some notifications going out to employees today.

No specific departments were highlighted in Nadella’s letter. The CEO does write that Microsoft will continue hiring in “key strategic areas” even as other roles are eliminated.

Additionally, the company will take on a $1.2 billion charge in Q2 related to its severance costs, lease consolidation, and changes to its hardware portfolio.

Microsoft says that benefit-eligible employees in the U.S. will receive them, including severance pay, continuing health care coverage for six months, 60 days’ prior notice from termination, and more. Benefits for those outside the U.S. will align with that countries’ employment laws.

“We know this is a challenging time for each person impacted,” said Nadella in today’s letter. “The senior leadership team and I are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible.”

Times are changing

Today’s letter cites changes in the way customers are spending and concerns about an economic recession. Nadella writes that customers who spent more in the pandemic are now trying to optimize their digital spending and “do more with less.”

This month marks one year since Microsoft first announced its desire to purchase Activision Blizzard. Its run into several speed bumps along the way, including the U.S. Federal Trade Commission’s recently filed lawsuit to block the acquisition.

“When I think about this moment in time, the start of 2023, it’s showtime–for our industry and for Microsoft,” said Nadella. “As a company, our success must be aligned to the world’s success. That means every one of us and every team across the company must raise the bar and perform better than the competition to deliver meaningful innovation that customers, communities, and countries can truly benefit from. If we deliver on this, we will emerge stronger and thrive long into the future; it’s as simple as that.”