As its cloud-computing customers review their spending and the company prepares for a potential recession, Microsoft Corp (MSFT.O) announced on Wednesday that it would cut 10,000 jobs and take a $1.2 billion charge to earnings.
The layoffs increase the tens of thousands of layoffs that have been announced recently across the technology sector, which has slowed down after experiencing rapid growth during the pandemic.
The announcement comes as the software developer plans to increase investment in generative artificial intelligence, which the market views as the new growth area.
According to him, customers wanted to “optimize their digital spend to do more with less” and “exercise caution as some areas of the world are in a recession and other areas are anticipating one.” “At the same time, developments in AI are giving birth to the next big wave of computing.”
Less than 5% of Microsoft’s workforce will be let go, according to Nadella, and notices will start to be given out on Wednesday.
But he added that Microsoft would continue to hire in “strategic areas”. Most likely, one of those areas will be AI. This week, Nadella praised AI to world leaders gathered in Davos, Switzerland, saying the technology would change its offerings and have an impact on people all over the world.
Microsoft has considered increasing its $1 billion stake in OpenAI, the Silicon Valley startup that created the crazed ChatGPT chatbot, which Microsoft intends to launch soon through its cloud service.
Microsoft’s cloud revenues have skyrocketed in recent years due to a surge in business demand for online data hosting and computing services provided by the so-called cloud. However, growth slowed to 35% in the first quarter of fiscal 2023, and the company anticipates further cooling. It stated a small number of roles had been cut in July of last year.
