Tech giants on life support: Over 150,000 people laid off in the sector last year

Microsoft will cut 10,000 jobs in the latest round of layoffs that will hit the tech industry. This could affect as much as five percent of their global workforce and will cost the business 1.2 billion dollars in severance and reorganization costs.

Microsoft CEO Satya Nadella stated that while consumer spending increased during COVID-19, people have now started to manage their budgets more cautiously. He added that the company will continue to hire in key areas in the coming days, reported the Financial Times.

In a letter to employees, Nadella said that most of the world is in recession or expects one, while ‘at the same time, the next big wave in the IT sector is being born, but with advancements in artificial intelligence.’ It is worth noting that Microsoft is considering investing several billion dollars in the artificial intelligence company OpenAI, the producer of ChatGPT.

They are not the only ones in trouble

We did not have to wait long for the next round of layoffs in the tech sector. Microsoft’s story may be the latest, but it certainly will not be the last as giants seek to tighten their belts after the pandemic boom, when lockdowns logically benefited them.

However, just because the pandemic is ‘behind us’, it does not mean that the entire sector is stagnating. Reports suggest that Microsoft is considering a ten billion dollar investment in the company behind ChatGPT, the world’s most popular chatbot that has won millions of users in just a few weeks of its existence.

We must not forget Microsoft’s proposed acquisition of Activision Blizzard, which would bring a whole new world of the most popular games to their large assortment. Still, this is clearly not enough to comfort the thousands of employees who will face layoffs in the early days of 2023.

Hundreds of tech companies, including some of the biggest names in the sector such as Amazon and Meta, have announced layoffs in recent weeks. At the beginning of this year, Amazon announced that it plans to cut more than 18,000 jobs due to the ‘uncertain economy’ and rapid hiring during the pandemic, while Salesforce is cutting ten percent of its total 80,000 employees.

Meta also announced in November that it would lay off 13 percent of its workforce, totaling 11,000 employees.

When the whole world was closed, the industry thrived

As is the case with other tech companies, Microsoft’s business flourished during the pandemic, mainly driven by the increase in remote work and other online activities. Their workforce grew by about 40,000 employees between June 2021 and June 2022, when they reported having around 221,000 permanent employees, including 99,000 outside the US.

As business slowed down last year, the company began a series of layoffs, and the last 10,000 layoffs are expected to be ‘processed’ by the end of the third quarter of 2023. The letter to employees states that some staff will be notified immediately.

Nadella promised that ‘we will treat our people with dignity and respect’ and that they will act transparently. More than 1,000 tech companies laid off an astonishing 154,336 employees just in 2022, according to the Layoffs.fyi website that tracks layoffs.

This year, including Microsoft’s latest losses, the site states that 26,061 employees in the tech sector have already been laid off.