Microsoft is laying off 10,000 employees out of its approximately 220,000 person workforce. CEO Satya Nadella announced in a statement released on Wednesday.
The layoffs are set to take place by the end of the third fiscal quarter on March 31,2023. According to Bloomberg, the layoff also impacts the gaming division of Microsoft such as Bethesda and Xbox.
The layoffs will impact 5% of the total workforce of Microsoft according to Nadella. He added that the company is also looking to hire in key strategic areas. “It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas.” According to the statement, Microsoft plans to further expand into AI as “the next major wave of computing is being born with advances in AI”.
Reports indicate that Microsoft is planning to invest $10 billion into OpenAI, owner of the popular AI writing tool, ChatGPT.
The company states that they are working on bringing changes to the hardware portfolio in Q2 this year with a severance cost of $1.2 billion in order to adept to platform shifts. “These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts. 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.”
Microsoft says they are committed to ensuring that affected employees have the support of the company during their transition, such as continuing healthcare coverage for six months and career transition services, and 60 days’ notice prior to termination.
The tech giant had also previously laid off 1,000 employees across various departments including Xbox, Microsoft Strategic Missions and Technology, and the office of the Chief Technology Officer.