American software giant Microsoft may announce plans for significant job cuts around the world within days. The reason for the probable cuts is the slowdown of the global economy, reports Sky News.
Microsoft, which employs more than 220,000 people, is considering cutting about 5% of its workforce, which equates to about 11,000 jobs.
The company, which made a huge bet on the growth of cloud computing and now has a market value of $1.78 trillion, is due to report second-quarter earnings next week.
If the decision is final, the layoff announcement will likely come before Satya Nadella, Microsoft’s chairman and chief executive officer, reports to investors on Jan. 24.
In recent weeks, many major tech companies have begun cutting staff. Amazon has announced plans 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 cutting its workforce by about 11,000 positions.
Big tech companies have been forced to respond to signs of a global economic downturn, and many have hired tens of thousands of additional workers during the pandemic.
The Twitter company owned by Elon Musk also cut thousands of jobs, while PC maker HP cut 6,000 jobs.
Last October, Microsoft warned of slowing growth in its cloud computing business, acknowledging that large enterprise customers were reassessing costs in response to economic challenges.
“In a world facing increasing headwinds, digital technology is the ultimate tailwind,” Satya 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.”
Under Nadella’s leadership, the company has transformed itself, although its profits have declined in recent quarters due to the rising dollar. It is also battling regulators to get approval for its £56bn takeover of Activision Blizzard, maker of the Call Of Duty game.
The company surprised investors last month by buying a £1.5bn stake in the owner of the London Stock Exchange as part of a long-term cloud computing partnership.
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.