Microsoft to Cut 9k Workers in Second Wave of Major Layoffs

[idkwhattocallme]

For the most part, I'm indifferent to layoffs. Companies over hire and then course correct. It's part of the game. But for MSFT, it rubs me the wrong way. In the past 5 years, their stock has soared (150% on stock and doubled in valuation). They are insanely profitable ($82B profit). They are diverse (no existential business risk). The fact that they are unceremoniously laying off 30K of the people that helped them get there drives home it's just a paycheck, do your job, but know it can and will end when convenient for the company. I know folks will argue, low performers, but really. This "productivity apps" company hired them, onboarded them, made $82B in profit, surely they can figure out how to uplevel folks. Also how do you have a layoff every couple of months for 3 years. Thinking about the middle class in the previous generation, it was unions that effectively ensured a labor job meant a secure future. I wonder if that's the solution (again).

[stego-tech]

> Thinking about the middle class in the previous generation, it was unions that effectively ensured a labor job meant a secure future. I wonder if that's the solution (again).

It is, and they are. It’s why Reagan fired ATC strikers and blackballed them. It’s why private enterprise stockpiled machine guns and chemical weapons against strikers back in the Gilded Age. It’s why companies will spend billions to block Unions rather than just give workers the few million or so more they need over a decade to just maintain a standard of living. It’s why they’ll close down stores, warehouses, offshore jobs and outsource to contractors to penalize Unions.

Unions are a direct response to the inequality of Capital allocation and distribution.

[shadowtree]

This pairs well with:

1 - Microsoft investing 3bn USD in India-based developers: https://www.reuters.com/technology/microsoft-invest-3-bln-ex...

2 - Microsoft having 4700 H1B filings for fiscal 2025: https://www.myvisajobs.com/employer/microsoft/

Utterly predictable behavior by Satya Nadella.

[amendegree]

Not to hate on immigrants… but shouldn’t H1B’s be the first on the chopping block of layoffs? Hard to imagine all those H1Bs are so unique that others already employed can’t replace them.

[onlyrealcuzzo]

I will just comment that MSFT felt the need to get 1264 approvals for NEW H-1B petitions THIS year.

[darth_avocado]

The layoffs are mostly in the sales division as pointed out by other commentators. H1B filings most likely would not be in sales.

[InkCanon]

Also: Microsoft India untouched by layoffs, actually hiring

https://timesofindia.indiatimes.com/technology/tech-news/mic...

[vitaflo]

This is the future for all tech companies. Tech workers in the US are the modern day factory workers. Offshore skill set rise plus AI means the end of US tech jobs in the next decade just like it meant the end of US factory work in the 90's.

Everyone in tech thinks they are special but companies will always do what they can to reduce costs and tech salaries are some of the biggest costs companies have. They're going to do everything in their power to reduce them.

[pratnala]

Layoffs are planned in India too.

[gsky]

They need employees to serve their Indian market.

[crmd]

Earlier in my career I worked for a tech industry-famous CEO who is long retired.

One of the most unconventional things he taught me was that “our highest obligation is to employees and their families. Second is to investors. Third is to the communities we operate in. Obviously don’t ever say this in a board meeting or investor conference”.

And he meant it. When products got cancelled, people got reassigned. Terminations for poor performance happened but were individual cases.

I’m quite sure the idea of firing people to goose the share price never even crossed his mind.

[mxuribe]

Hi @crmd For that tech industry-famous CEO, did the company that they used to run continue/preserve even a little bit of that good and common-sense approach? Because if so, then I'd love to know the name of the firm...so that i can immediately apply for a role there. (My profile has my email address if you wish to keep the company name sharing private.) Mind you, I'm employed, but, ahem, less than enthused with my current state of affairs. :-)

[htrp]

He retired before the business climate could move against him

[nly]

Aren't most MSFT employees also shareholders thanks to stock awards?

[eastbound]

Did the company crash? In other words, was it a sustainable way of working, or was it a way that did not only end up removing the jobs of those who would have been fired, but also those who wouldn’t have been, destroying more jobs than it saved by reassigning people?

[crmd]

I don’t remember when it became normalized for profitable companies to casually execute major layoffs. It used to be a “shameful” last resort that CEOs turned to as a last ditch effort to save a company facing bankruptcy.

I suspect it’s related to the stock buyback safe harbor rule (Rule 10b-18.) Layoff announcements used to be a sign of a company in crisis, now the stock price often immediately rises, perhaps because shareholders are anticipating a short-term windfall.

[jimmydddd]

The Wall Street bros love layoffs. They think it makes a company more efficient. They don't see it at all as a problem with management, they just think it's a great idea. So the stock often goes up with a layoff announcement.

[rl1987]

Twitter layoffs of 2022 might have been the Lehman Brothers moment that marked the end of programming gold rush.

[heathrow83829]

well, as productivity per employee increases you need fewer of them. So lay offs can be seen as a sign of a healthy productivity increase.

FAANG total headcounts have been trending down for years now (2-3).

[sokoloff]

So, 43 years ago?

[pseudosavant]

Microsoft's most recent quarterly numbers, for those interested:

    - Revenue was $69.6 billion and increased 12%
    - Operating income was $31.7 billion and increased 17% (up 16% in constant currency)
    - Net income was $24.1 billion and increased 10%

How can you justify needing layoffs when you made $24B in net income on $70B in revenue?? I guess $24B and a 10% YoY increase is almost failing?

[devjab]

I'm not going to defend Microsoft, but you don't budget based on current achievements. You budget on future prospects, and right now Microsoft is facing some tough times in Europe. The biggest IT expense in my country is the public sector buying various Microsoft licenses, and everyone from the top down are looking into replacing Microsoft with Open Source alternatives due to digital sovereignty.

I doubt that has a big impact on Microsoft's gaming divisions, but it would help explain why they might not think the previous decades of growth will continue.

[onlyrealcuzzo]

That's not good enough for a P/E of 40....

[ponector]

> How can you justify needing layoffs when you made $24B in net income

Cut costs and make 25B next quarter! Cut more in US and hire in India. Make 27B in a quarter next year!

[trollied]

The answer is shareholders.

[seatac76]

Xbox has really become a sore point in the MS portfolio. Their pivot to a marketplace model where their games run everywhere is an admission that they lost the race to Sony. Block buster acquisition like Activision further have exacerbated their conundrum. What Xbox is now can be done by a much smaller number of people.

[tjpnz]

>Their pivot to a marketplace model where their games run everywhere is an admission that they lost the race to Sony.

Don Mattrick has a lot to answer for. Microsoft was killing it during the seventh generation and he was able to burn everything down over a period of two days. Xbox never recovered after that.

[strict9]

Surprisingly no mention of AI in an article about mass layoffs at a tech company. Wonder if that line has finally had all the juice squeezed from it to explain away layoffs and outsourcing.

[mjr00]

AI works as a smokescreen when doing product development layoffs, but you can't really use it for sales, which is still very human-to-human, or when canceling entire projects like they're doing in XBox Game Studios.

[ActionHank]

They've all done so many layoffs that they've realised there is no need to give the public a reason anymore, they don't need a scapegoat.

[trashcan]

The first sentence of the article is:

> Microsoft Corp. began job cuts that will impact about 9,000 workers, its second major wave of layoffs this year as it seeks to control costs while ramping up on artificial intelligence spending.

And AI is a bullet point in the "Takeaways, powered by Bloomberg AI" section as well.

[aaomidi]

Their HC still keeps growing so…

[jajuuka]

These recent Microsoft layoffs make no sense. Hitting all across the organization, performance, and tenure levels with no real pattern. Are the layoffs going to continue until moral improves or what?

[InkCanon]

I really want to destroy this blatant lying by tech CEOs that these are layoffs because of AI, tax laws or interest rates. Most tech companies have headcounts at their peak or slightly below. Whenever these amounts are fired, often near equal amounts are hired in India (and not counting L-1 transfers into the US, H1Bs etc). AI is a fiction invented to cover up the true reason: tech companies have adopted a long term strategy of profit making by wage arbitrage. They have identified their largest cost to be people, and are working to fix this.

[stavros]

https://archive.is/Jn4vC

[mrtksn]

This appears to be sales and marketing layoffs. If AI is worth its salt, theoretically the sales and marketing people should be able to prompt they way into grabbing Microsoft's market.

[nyarlathotep_]

I do wonder if these trends continue (paired with the offshoring and H1B replacements they're all in on (otherwise mentioned in this thread), how this effects the local housing markets in places like, in this case, Seattle.

If every third 22 year old isn't making 200K, how are you going to sustain a market of crapshacks "worth" 1M?

[InkCanon]

I predict many areas will eventually become like old mining/factory towns. Middle class jobs are being offshored at an astounding rate. Just doing some math - if a tech company lays off 7% of its employees for six years and sends the jobs overseas, nearly half of its American employees will be fired

[TurkishPoptart]

American employees are, for the most part, being replaced by H1-B visaholders via off-shore contracting companies. This needs to change.

[mxuribe]

> American employees are, for the most part, being replaced by H1-B visaholders via off-shore contracting companies...

American companies have been trying to replace American works for decades....this is not new. I wonder if trying to stop folks trying to make a simple decent living in the U.s. is not the right approach? ...Rather, i think the focus should be against the leaders of the American companies...Because they seem to be the ones pushing to get rid of ALL workers...sure, for now, they're trying to replace American workers, but soon enough they'll want to get rid of the H1B workers too...and eventually get rid of ANY/ALL workers if it means they can squeeze as much money for themselves.

If/When AI and robots come en masse to "steal jobs", would you blame the workers who get kicked out of the companies (even if they had upskilled themselves), or would you blame the leaders who kicked the people out? With all due respect, my opinion is that i think you're blaming the wrong people.

[vitaflo]

Various unions of factory workers said the same thing in the 90's, and they had unions. If anything this is not going to change, only accelerate. History is repeating itself but tech workers are just the new factory workers.

[2OEH8eoCRo0]

$3tn market cap and can't find anything for them to work on? Yikes.

Sounds like a Monopoly. Why bother building something new?

[freggeln]

And at the same time Microsoft announces a new (sponsoring) partnership. https://news.microsoft.com/source/emea/features/premier-leag... Just excellent timing. :leSigh:

[darthplagius]

Meanwhile my buddy at Microsoft working on AI tools to "increase employee and engineer productivity" just started ramping up sharing job postings for their department.

[slake]

This is how I don't get when some predict that we'll have a shorter working week when AI improves productivity. If productivity gains are 50% the companies would rather have 50% lesser employees rather than 50% shorter work weeks.

[vitaflo]

Or have the same work week and employee size and get twice the amount of work done for the same cost. It's never going to benefit the workers in any case.

[ChrisArchitect]

[dupe] https://news.ycombinator.com/item?id=44443223

[insane_dreamer]

cutting an xbox game studio that was already working on 3 games, as part of this: https://www.windowscentral.com/gaming/xbox/microsoft-is-clos...

meanwhile revenue is up 15% YOY

[slake]

This is just MSFT (as did others) acknowledging the future has a lot less workers in it.