Difficult but necessary, says Nadella as Microsoft plans to cut 10,000 jobs

Microsoft will cut nearly 10,000 jobs from its engineering division, according to CEO Satya Nadella’s communication to the employees released on a blogpost. Microsoft joins the list of tech giants that have fired employees recently.

“Today, we are making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3. This represents less than 5 percent of our total employee base, with some notifications happening today”, Nadella wrote in the post.

Further, he said that the company would invest in strategic areas for the future by allocating both capital and talent.

“Second, we 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,” added Nadella.

Talking about the severance pay, the CEO of IT giant said that treating the employees with dignity was his priority. He said that the company will spend $1.2 billion in Q2 for severance cost, among other things.

“As such, we are taking a $1.2 billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces.”

He said that the US-based employees would receive several benefits, while other employees would get benefits according to the employment laws of their countries. 

“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.”

Difficult but necessary

He said that the decision to fire over 10,000 employees is a tough but necessary. Nadella wrote, “These decisions are difficult, but necessary. They are especially difficult because they impact people and people’s lives – our colleagues and friends. We are committed to ensuring all those whose roles are eliminated have our full support during these transitions.”

He said that Microsoft’s progress must be aligned with to the world’s success. “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”, said Nadella.