Microsoft has become the latest large tech company to reverse a pandemic-era recruitment spree in the face of a slowing economy as it announced plans to shed 10,000 workers by the end of March, or nearly 5 per cent of its staff.
The company is a big employer in the Republic with about 3,500 staff across its Irish operations in Leopardstown in south Dublin. No comment was available from Microsoft as to how many Irish roles might be impacted but a 5 per cent reduction would suggest 175 roles being affected.
Minister for Finance Michael McGrath said the Government had not received any word yet on potential Irish job losses at Microsoft. “We don’t have any indication yet. I spoke with the IDA this morning, and they don’t have a readout yet of what the implications will be for Ireland,” Mr McGrath told The Irish Times on the fringes of the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday.
The cuts extend the sharp correction that has swept through the tech sector in recent weeks as the historic boom in digital demand caused by Covid-19 has faded.
Microsoft added 40,000 workers in its latest financial year, more than double the year before, after chief executive Satya Nadella predicted that customers would continue to spend heavily on technology despite rising inflation and economic stresses.
Mr Nadella sounded a more cautious note in a memo to staff on Wednesday, saying: “As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimise their digital spend to do more with less.”
He also said that customers across the board had become more cautious “as some parts of the world are in a recession and other parts are anticipating one”.
Microsoft’s revenue surged 18 per cent in its latest financial year to the end of June as an explosion in remote working and other changes caused by the pandemic boosted demand for new PCs and cloud computing services. But Microsoft is expected to report growth of only 2 per cent when it announces earnings next week.
Despite the cuts Mr Nadella said Microsoft would keep recruiting, and signalled another big wave of investment as the software giant tries to take the lead in a new wave of technology based on the latest advances in artificial intelligence. The tech industry “is unforgiving to anyone who doesn’t adapt to platform shifts”, Mr Nadella said to staff. “The next major wave of computing is being born with advances in AI.”
Speaking at Davos on Wednesday, Nadella predicted that the latest AI would be “revolutionary” and have as big an impact in the tech world as the emergence of smartphones and cloud computing more than 15 years ago.
In an official filing, Microsoft said the cost-cutting moves would include “changes to our hardware portfolio, and lease consolidation to create higher density across our workspaces”. The actions are expected to result in a $1.2 billion €1.1 billion) charge for its second fiscal quarter, which ended in December, or a 12-cent hit to its earnings per share, the company said. - Copyright The Financial Times Limited 2023
