Microsoft prepares for second round of layoffs

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.

This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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