Microsoft announced on Wednesday that it is cutting its workforce by 10,000 employees as of 31 March this year due to a plunge in revenue growth.
The tech company is taking a $1.20 billion charge in the fiscal second quarter(Q2) that will result in a negative impact of 12% on earnings per share (EPS).
“I’m confident that Microsoft will emerge from this stronger and more competitive,” CEO Satya Nadella told employees in a memo that was posted on Microsoft’s website.
Nadella noted that the step will reduce Microsoft’s headcount by less than 5%, adding that some employees will find out this week if they are losing their jobs.
Employees in the US who are eligible for benefits will receive severance that’s above the market and six months of health care and stock vesting, along with 60 days’ notice before their work ends, according to Nadella.
He underlined trends in the business climate that he has described in recent months.
“As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less,” he wrote.
The CEO added: “We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.”