[Asia Economy Reporter Haeyoung Kwon] Microsoft (MS) in the United States is reported to lay off about 5% of its total workforce. As global economic uncertainties increase, IT companies are entering a phase of austerity management, continuing the wave of layoffs from last year into the beginning of this year.
According to major foreign media including Bloomberg on the 17th (local time), MS will announce a layoff plan involving 11,000 employees on the 18th.
As of June last year, MS had 221,000 employees. The planned layoffs represent 5% of the total workforce, significantly exceeding last year's layoff rate of 1%. MS is expected to mainly reduce staff in the technical departments and reportedly plans to lay off more than one-third of the personnel in the HR department as well.
MS will announce the layoff plan ahead of its Q3 fiscal year earnings report scheduled for the 24th. Bloomberg predicts the revenue growth rate will be around 2%, the lowest since 2017. Even the cloud computing business, which has experienced rapid growth, is reported to be slowing down.
Dan Romanoff, an analyst at Morningstar, said, "From a broad perspective, MS's layoff plan indicates that the environment is unlikely to improve and is more likely to worsen."
As warnings of economic slowdown grow this year, MS is not only implementing layoffs but also cutting various costs. To reduce labor costs, MS recently paid a lump sum for unused annual leave to employees in April and has since allowed managers to grant unlimited discretionary leave to employees.
Following the COVID-19 pandemic, the digital transformation through non-face-to-face methods has brought a boom to the US big tech employment market, but it is rapidly cooling amid concerns of economic slowdown. Amazon, the world's largest e-commerce company, recently announced plans to lay off 18,000 employees, and Meta Platforms announced plans to lay off 11,000 employees. According to 'Layoffs.fyi', a site tracking IT company layoffs, 104 companies worldwide have laid off 26,061 employees so far this year.
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