Microsoft prepares for second round of layoffs

Article by Gadjo Sevilla | Oct 19, 2022

The news: Microsoft announced layoffs across multiple divisions—and while no official number of job cuts were revealed, a source said it was just under 1,000, per Insider.

Second round of layoffs: Following layoffs in mid-July, which Microsoft said affected sub-1% of its 180,000 employees and were part of its annual restructuring—not tied to the economic downturn—the second round of job cuts is clearly aimed at addressing the broader economic outlook.

Microsoft already slowed hiring in May in reaction to market conditions.
The recent layoffs reflect cuts across the organization and reportedly affected a variety of levels, positions, teams, and geographies.
The cuts affected the Xbox division, the Strategic Missions, Technology.org, and more.
Axios said that multiple laid-off employees turned to Twitter and Blind to share that their jobs had been cut.
"Like all companies, we evaluate our business priorities on a regular basis and make structural adjustments accordingly," a Microsoft spokesperson told Insider. "We will continue to invest in our business and hire in key growth areas in the year ahead."

The Great Hesitation: Microsoft and other Big Tech companies are bracing for a looming recession by freezing hiring, cutting jobs, and focusing on their most profitable products and services.

This means dialing down their ambitions and pausing long-term projects or moonshots, while increasing efficiencies and profitability in their key businesses.
Among other tech companies, Intel is reportedly planning thousands of layoffs as it faces declining sales of its consumer chips.
A Microsoft Surface event last week revealed a pared-down release of three products focusing on some of the company’s most popular tablets and laptops.
The company had no announcements for more aspirational lines, such as its dual-screen Surface Duo smartphone or lower-cost Surface tablets and laptops.
With the PC market facing a steady and consistent downturn, Microsoft’s small niche in premium devices could shrink even more, making the company unlikely to move the needle on new PC adoption.

The key takeaway: Analysts believe that companies with the largest focus on consumer spending will continue to experience a downturn until the end of the year. This includes PC and device makers like Microsoft.

There’s hope for laid-off employees as US startups are keen on gaining tech talent from companies like Meta, Microsoft, and Amazon.
Any company that relies on harnessing emerging technologies as part of its core business strategy will need skilled tech workers even as we head toward a possible recession.