Microsoft has joined the list of the tech companies which has cut jobs amid mounting economic uncertainty. Moreover, Bloomberg reported that the company has taken this step as part of realignment of business groups and roles after the close of fiscal year. However, Microsoft intends to increase its headcount in coming few months.

Layoffs as part of strategic alignment

The job cuts came at the back of Microsoft’s decision to slowdown hiring in Windows, Teams and Office groups. The layoffs will affect about 1% of the company’s total workforce. Although, the layoffs do not follow any specific pattern with respect of product division or geographical dimensions. Currently, Microsoft is employing about 181,000 employees worldwide. “Today we notified a small number of employees that their roles have been eliminated. This was a result of a strategic realignment, and, like all companies, we evaluate our business on a regular basis. We continue to invest in certain areas and grow headcount in the year ahead.” A Microsoft spokesperson spoke on behalf of the company regarding the decision to cut jobs.

Decline in shipments

The latest job cuts are not as severe as they were back in 2017 and 2009. The company eliminated thousands of people in 2017 and laid-off 5,000 workers back in 2009. The tech giant witnessed  a steep decline in PC shipments during the 2nd quarter of 2022. Therefore, it has a significant impact on company’s traditional Windows business. Although, Microsoft reported strong earnings in Q3. There was a 26% year-over-year increase in cloud revenue and overall revenue of $49.4 billion. However, the company revised its Q4 revenue and earnings guidance downward due to the impact of foreign exchange fluctuations.

Layoffs in other large tech firms

Layoffs within the tech sector in U.S. have accelerated over the past few months. Investors have become more vary of a probable recession. Significantly, startups have faced a severe push back amid rising economics concerns. Similarly, big tech firms like Oracle has planned a $1 billion cost-cutting initiative which also include thousands of lay-offs. Twitter and Telsa have also laid off a large number of their employees.

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