Satya Nadella Confirms 10,000 Microsoft Layoffs

Microsoft CEO Satya Nadella said, "Today, we are initiating adjustments that will result in the elimination of 10,000 employees from our overall staff until the end of FY23 Q3." The world's largest software corporation, Microsoft, said on Wednesday that it will let go of 10,000 employees over the next months. This is the company's biggest round of layoffs since 2014.Microsoft CEO Satya Nadella informed staff on Wednesday that the company will be letting go of fewer than 5% of its worldwide workforce owing to a slowdown in consumer demand and a likely impending recession.

Our cost structure will match our income and where we anticipate client demand to be.Through the conclusion of the third quarter of FY23, we are implementing adjustments that will result in a 10,000-job decrease in our entire workforce, according to Nadella. With some notifications occurring today, this represents less than 5% of our whole employee base.

The third fiscal quarter of the Redmond, Washington-based business concludes on March 31, 2023.The total workforce of Microsoft is estimated to be 221,000 employees globally.Microsoft is reducing positions in certain sectors, according to Nadella, but it will keep hiring in "important strategic areas," though he did not name them.Microsoft made cutbacks in 2022 as well, even though Wednesday represented one of the biggest layoff waves in business history.

Less than 1,000 employees across several divisions were let go by Microsoft in October 2022, just days before it released its first quarterly results report for the fiscal year 2023.Microsoft reported in July that fewer than 1% of its global workforce had been let go.After spending nearly $7 billion to acquire Nokia's devices and services division, Microsoft let off roughly 18,000 workers in 2014.

Why Microsoft Is Firing 10,000 Staff Members

Nadella stated that due to macroeconomic factors and clients slowing down their IT investment, Microsoft is laying off 10,000 people.

For its second fiscal quarter of 2023, Microsoft anticipates a modest 2 percent year-over-year sales growth, or between $52.35 billion and $53.35 billion.

This growth rate is far lower than what Microsoft has experienced in recent years. For instance, Microsoft's sales increased by 11% year over year in the first quarter of its fiscal year 2023.

As clients increased their digital spending during the epidemic, Nadella noted that they are now doing more with less by optimising their digital spending. Additionally, organisations across all sectors and regions are being cautious since certain regions of the world are now experiencing a recession while others are bracing for one.

Nadella stated that Microsoft must work to consistently produce results while investing in long-term prospects, and he expressed confidence that the company "will emerge from this stronger and more competitive."

Hit for Microsoft of $1.2 billion

Microsoft will record a $1.2 billion charge for severance payments for dismissed workers, adjustments to its hardware lineup, and the expense of consolidating leases as it increases workspace density.Nadella added, "These are the types of difficult decisions we have had to make over the course of our 47-year existence to remain a significant company in this sector that is merciless to anyone who doesn't adapt to platform developments.

AWS has not been impacted by layoffs.

Amazon Web Services is the biggest cloud computing rival of Microsoft.Along with Google Cloud, the two businesses largely control the vast worldwide cloud market.Despite the 18,000 layoffs that Amazon just announced, sources informed CRN that AWS will not be affected by the layoffs.

One senior executive from an AWS partner who was acquainted with the situation but asked to remain anonymous stated, "This is harming Amazon as opposed to AWS." "The amount of layoffs for AWS has no significance whatsoever."

The Amazon Stores and PXT (people, experience, and technology) organisations will be most affected by the changes, according to Andy Jassy, the current CEO of Amazon and the previous CEO of AWS.

The time is now for AWS partners and customers to go more deeply into cloud computing, according to AWS CEO Adam Selipsky, who made this statement in December during AWS re:Invent.

During a keynote address at AWS re:Invent 2022, Selipsky declared on stage that "there's this uncertainty in the air." "Many people are questioning if we should slow down. Should we stop now? No. The moment has come to lean in more.

In contrast to hosting such applications on various forms of infrastructure, our end customers will save money when they utilise the cloud, according to AWS CEO, "not in spite of it, but because of the economic unpredictability." "The cloud journey has to continue to pick up speed right now."On January 24, Microsoft is expected to release financial results for the third quarter.

Difference Between AWS and Microsoft

In terms of customer cloud adoption, Ethan Simmons, managing partner of cloud consulting and AWS services firm Pinnacle Technology Partners, based in Norwood, Massachusetts, said he sees a clear difference between AWS and Microsoft.

We expect a further 30% growth in 2023 from the 30% increase in 2022 in our AWS use, he said. The number of new apps, services, and workloads using AWS is continuing to expand rapidly. Azure adoption has traditionally been a more cautious business IT investment. Leading-edge start-ups and innovative businesses are more the focus of AWS. Customers that are running current corporate workloads on Azure are doing so on AWS when creating new apps and services.

Customers of Pinnacle Technology Partners are using its managed services to maximise their cloud investment. Customers want us to help them spend their money on the cloud more wisely, he added. This is giving us additional chances.

David Stinner, the founder and CEO of US Itek, an MSP with headquarters in Buffalo, New York, praised Nadella for taking the difficult decisions required for Microsoft to maintain its success. Stinner actually stated that he views the layoffs as a challenge for Microsoft partners to accept change and spur more growth.If we don't follow Satya Nadella's vision and convert more people to Office 365 and Azure, how else are we going to go out and attract new customers? He queried. Since Bill Gates, whose motto was "a computer on every desktop in every business and every home,

"Satya Nadella is the most visionary CEO Microsoft has ever had. Microsoft now promotes the idea that its software is designed to help users realise their greatest potential. We, as MSPs, can no longer fly by the seat of our pants due to the maturation of our industry. "I think the new Microsoft partner standards are challenging, but you have to do challenging things to be great."

Regarding the layoffs, Stinner stated that in order for businesses to survive in the work-from-home age projected by the epidemic, they must follow Microsoft's lead. "I am aware that Microsoft is shutting certain operations in the Seattle region, making significant write-downs, and terminating some employees. It is the same as any other Fortune 500 firm adjusting to a new work-from-anywhere approac

 I see this decrease in staff as simply a result of attrition and a shift in how they conduct business. That isn't a problem in my opinion. There will be some employees who receive new possibilities if your firm changes paths, and there will be some people who get pink slips that aren't so great.made available to the economy. People who wish to criticise this are social pessimists, not thinkers who operate from an abundant attitude.

According to Stinner, sales of Microsoft 365 and Azure will increase by 42% in 2022 as US IT's Microsoft business continues to develop strongly. This year, he anticipates sales of Azure and Microsoft 365 to increase by another 40 to 60 percent. The fastest-growing aspect of his MSP company, according to him, is Microsoft. "My confidence in my future with Microsoft is at an all-time high. Small-business workloads are still moving to Azure. I observe obstinate small business owners who previously didn't completely embrace the cloud doing so today.

In 2022, 20 percent of Stinner's installed base of MSP clients switched from on-premises servers to Microsoft 365 and Azure, and he anticipates that another 30 percent will do the same in 2023. By doing so, a total of 75% of his clients will have switched to Microsoft 365 and Azure.

The transition to Microsoft 365 and Azure, according to Stinner, is a logical development of the Microsoft partner business. According to him, this is the logical next step given all the infrastructure the channel has provided over the years.