Microsoft to axe thousands of jobs in latest cull by tech giant

Business

Microsoft is preparing to axe thousands of jobs in the latest move by one of the world’s biggest technology companies to reduce its workforce in the face of a slowing global economy.

Sky News has learnt that the US software giant could announce plans to cull a significant number of posts around the world within a matter of days.

Microsoft, which employs more than 220,000 people, including 6,000 in the UK, is said to be contemplating cutting roughly 5% of its workforce, which if accurate would equate to approximately 11,000 jobs.

That figure could not be verified on Tuesday evening, and one analyst suggested that Wall Street would be surprised if the figure was not higher than that.

It was also unclear whether or how many UK-based positions might be affected.

The company, which has placed huge bets on the growth of cloud computing and now has a market value of $1.78tn, is due to report second-quarter earnings next week.

If finalised, an announcement about headcount reductions is likely to come before Satya Nadella, Microsoft’s chairman and chief executive, updates investors on its financial performance on January 24.

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In recent weeks, a slew of large tech companies have wielded the axe, with Amazon disclosing plans this month to cut 18,000 jobs, or about 6% of its workforce.

Salesforce, the cloud software provider, said it would cut 8,000 jobs, while Meta, the owner of Facebook, is reducing its workforce by approximately 11,000 roles.

Big technology companies have been forced to respond to signs of a global economic slowdown, with many having recruited tens of thousands of additional employees during the pandemic.

Microsoft Chief Executive Officer Satya Narayana Nadella
Image:
Satya Nadella will update investors on Microsoft’s financial performance next week

Under the ownership of Elon Musk, Twitter has also moved to cut thousands of jobs, while 6,000 have also gone at the personal computer manufacturer HP.

Microsoft warned in October of a slowdown in its cloud computing business, an acknowledgement that major corporate customers were re-evaluating spending in response to economic challenges.

“In a world facing increasing headwinds, digital technology is the ultimate tailwind,” Mr Nadella said in October.

“In this environment, we’re focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way.”

The company has been transformed under Mr Nadella’s leadership, though its earnings have been hampered by the strength of the dollar in recent quarters.

It is also fighting a battle with regulators to secure approval for a £56bn takeover of Activision Blizzard, the maker of Call Of Duty.

Last month, it surprised investors by acquiring a £1.5bn stake in the owner of the London Stock Exchange as part of a long-term cloud computing partnership.

Microsoft expects to generate $5bn in revenue during the life of the alliance.

Ahead of its earnings next week, Microsoft’s stock was downgraded to a sell rating by analysts at Guggenheim, who argued that the figures “may disappoint investors”.

“While most investors see Microsoft as a large stable business that can weather any storm, it does have vulnerabilities, some of which could be exacerbated by this macro[economic] slowdown,” they wrote.

Responding to an inquiry from Sky News, a spokesman said Microsoft “does not comment on rumour or speculation”.

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