Microsoft planning thousands of job cuts amid economic slowdown

The logo of Microsoft is seen on the exterior of their offices in Herzliya, near Tel Aviv, Israel December 27, 2022. REUTERS/Rami Amichay
It has been reported that Microsoft is to cut staffing by 5%. Photo: Rami Amichay/Reuters

Microsoft plans to reduce its workforce by thousands in response to the current global economic slowdown,

The latest swathe of job cuts by one of the world's biggest technology companies could see a significant number of posts axed around the world, according to a report from Sky News.

Microsoft (MSF) employs 6,000 people in the UK, and 220,000 worldwide, is reportedly planning to decrease its global workforce by 5%. This would equate to approximately 11,000 jobs. It is currently unclear how many UK jobs will be impacted.

Microsoft has a market value of $1.78tn and is due to report its second-quarter earnings on January 24.

The Redmond, Washington-based firm is not alone in planning and finalising significant work force reductions.

Amazon (AMZN) has also declared plans to cut 18,000 jobs, or about 6% of its workforce, this month. And, cloud software provider Salesforce (CRM), recently announced it would cut 8,000 jobs.

Facebook owner, Meta (META), plans to reduce its workforce by approximately 11,000 roles and Twitter (TWTR) has also cut jobs.

Read more: Microsoft boss: 'Blockchain needs a 'ChatGPT moment'

Many tech firms expanded during the pandemic when most of the world's personal and professional activity went online.

However, the tech companies are now realigning themselves to adapt to a post-lockdown world, where society has reverted to using physical dimensions and monetary tightening is restricting consumer spending.

Microsoft chief Satya Nadella warned in October of a slowdown in its cloud computing business.

"In a world facing increasing headwinds, digital technology is the ultimate tailwind," Mr 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."

Ahead of its earnings announcement next week, Microsoft's stock was downgraded to a sell rating by analysts at Guggenheim.

Guggenheim argued that the earnings report "may disappoint investors".

The firm said: "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."

Watch: Microsoft to cut thousands of jobs – reports