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Journalism of Courage
Microsoft announced that it was planning to eliminate close to 10,000 jobs or nearly 5 per cent of its workforce in an attempt to save $1 billion in costs. The job cuts are likely to continue through the end of the third quarter of the financial year 2023. Microsoft CEO Satya Nadella has also penned an open blog post, which was also addressed to the company’s employees, outlining the reasons why the company is taking such steps and admitting this is a “challenging time for each person impacted.”
In the post, Nadella stressed that these are times of significant changes and it was clear that while Microsoft saw “customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.” He said that organisations in “every industry and geography” are now exercising “caution as some parts of the world are in a recession and other parts are anticipating one.”
He further noted that advances in artificial intelligence are ushering in a new wave of computing, which will be the next area of focus for the company. Microsoft is already in talks to invest another $10 billion into OpenAI— the startup behind ChatGPT, Dall-E. In fact, Microsoft will start offering ChatGPT to its Azure customers as part of the Azure OpenAI services.
According to Nadella, the company needs to invest in long-term opportunities, and clearly, AI is one such critical area. The post adds that Microsoft will be taking three steps keeping these long-term goals in mind. The first is the cost restructuring, which will impact 10,000 jobs. According to the post, this “represents less than 5 per cent of our total employee base.” Some employees were notified yesterday. However, Nadella also said that Microsoft will continue to “hire in key strategic areas.”
The second step is that Microsoft will “continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company while divesting in other areas.” Microsoft will be taking a “$1.2 billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation” as it “creates higher density across our workspaces.”
Third, those who are sacked will be given benefits for the transition process. The post notes, “US-benefit-eligible employees will receive a variety of benefits, including above-market severance pay, continuing healthcare coverage for six months, continued vesting of stock awards for six months, career transition services, and 60 days’ notice prior to termination, regardless of whether such notice is legally required.” For those outside of the US, the benefits will depend according to employment laws in each country.
The blog post ends by saying, “When I think about this moment in time, the start of 2023, it’s showtime – for our industry and for Microsoft. 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.” Nadella also thanked all employees who have contributed to Microsoft in his post.
