Microsoft announced on Wednesday that it will lay off 10,000 workers in the coming months as the economic downturn continues to punish US tech behemoths. The layoffs will affect slightly less than 5% of employees and come on the heels of similar moves by Facebook-owner Meta, Amazon, and Twitter, which have announced thousands of layoffs in the once-untouchable tech sector.
The cuts were made “in response to macroeconomic conditions and changing customer priorities,” according to a US regulatory filing by Microsoft. When asked about the layoffs just before the announcement, Microsoft CEO Satya Nadella said, “No one can defy gravity,” referring to the high inflation that was affecting global economic growth.
Why is this happening? News18 explains:
Multiple Reasons
The layoffs come after a major hiring spree at the height of the coronavirus pandemic, when businesses scrambled to meet demand as people went online for work, shopping, and entertainment.
But now, the tech industry is experiencing a severe slowdown since some recent months.
A report by the Guardian explained that a global economic downturn, rising interest rates, and regulatory challenges have prompted tech companies such as Alphabet and Amazon to reduce or eliminate hiring. Snap laid off 1,300 employees and reduced investments in late August.
According to an Axios report, Microsoft laid off around 1,000 employees across several divisions in October. Following Elon Musk’s $44 billion takeover of Twitter, the company laid off half of its workforce last week.
Bad News for Visa Holders
A December 2022 report by India Today citing data from layoffs.fyi ( a crowdsourced database of tech layoffs) said over 2 lakh employees have been laid off by around 1,400 tech companies since the start of Covid-19. The data also revealed that while 2022 will have been the worst year for the tech sector, and early 2023 may be even worse for tech workers.
By mid-November, more than 73,000 workers in the US tech sector had been laid off by companies such as Meta, Twitter, Salesforce, Netflix, and others. Meanwhile, over 17,000 tech workers in India have been laid off, the report said.
Layoffs in technology began around the first half of the year and will continue throughout the year. According to reports, tech layoffs will worsen in the first half of 2023. Several major technology companies, including Meta, Amazon, Twitter, and Netflix, among others, have already laid off hundreds of thousands of workers through 2022.
A report in the Guardian by Johana Bhuiyan on the plight of non-citizens who are facing layoffs in the tech sector in US, explained how immigrant tech workers on temporary visas have always had fewer options than green card holders or citizens because their visas, and thus their ability to work in the United States, are tied to their employers.
Even when done voluntarily, changing jobs can be a risk, literally in some cases, she wrote. Workers on H-1B visas, for example, must find a new employer willing to apply for and sponsor a new H-1B visa. When an application is submitted to the United States Citizenship and Immigration Services (USCIS), it is entered into a lottery to determine which applications will be considered. If their application is chosen in the lottery, USCIS will decide whether or not to grant them H-1B status.
This thorny and complex system frequently leaves people with H-1B visas feeling trapped in their current position, unwilling to risk losing their status by switching to another company. Those who are laid off must navigate the same system, but with the added pressure of finding another job within 60 days, the report said.
How Will the Layoffs Help Microsoft?
According to Microsoft’s filing with the US Securities and Exchange Commission, the cuts will result in a $1.2 billion charge in their next earnings announcement.
These are set to be released on January 24, when the Redmond, Washington-based company is expected to post its slowest revenue growth in years.
“As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimise their digital spend to do more with less,” Nadella said in an internal memo obtained by the SEC.
He stated that businesses worldwide were exercising “caution because some parts of the world are in a recession and others are anticipating one.”
According to the news site Axios, Microsoft has already made two rounds of layoffs, one in July that affected less than 1% of the workforce and another in October that affected less than 1000 people.
Which Indian Companies are Laying Off Workers?
And which Indian companies are laying off workers? According to an Indian Express report, companies such as Byjus, Dunzo, Amazon, Ola, and Sharechat have laid off employees.
- After laying off 5% of its workforce in December of last year, ShareChat is back with a new round of layoffs. Mohalla Tech, the parent company of ShareChat and Moj, is laying off 20% of its workforce, or over 400 people. The majority of the affected employees will be based in India, the report said.
- As part of its restructuring efforts, Ola has begun to lay off over 200 employees from its Ola Cabs, Ola Electric, and Ola Financial Services verticals. While the company announced that it would be laying off employees in September, it appears that those layoffs have been postponed until now.
- In the midst of these layoffs, an Amazon employee took to GrapeVine anonymously to describe the “current situation” at the company’s Indian offices. They stated that 75% of their team was laid off and that the layoffs had a significant impact on them, the report said.
- To cut costs, EdTech behemoth Byju’s announced last month that it would reduce its 50,000-strong workforce by 5% by March of this year. In Kerala, the company has already laid off approximately 100 employees from its media content division.
- Indian grocery delivery service Dunzo confirmed on Monday that it had laid off 3% of its workforce as part of cost-cutting measures.
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