Despite the high-profile layoffs from some of the biggest names in tech — Microsoft, Amazon, Meta and others — the broader labor market remains generally strong. Cooling wage growth has provided some investors optimism that it will relieve pressure on the Federal Reserve to keep raising interest rates, but hiring has slowed only slightly.
The skills of engineers and other technical talent are still in high demand. Those who are laid off will likely find roles directly in industries like banking, retail or health care, which are undergoing the digitization of their operations, rather than at big tech firms themselves, labor analysts and recruiters say.
Customers are seeking “to do more with less,” Mr. Nadella wrote to employees. “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,” he added.
The changes, including severance and other restructuring expenses, will cost $1.2 billion, Mr. Nadella said. In a regulatory filing, Microsoft said some of the costs would come from consolidating office leases, as well as “changes to our hardware portfolio.”
Microsoft makes the Surface line of laptops and tablets, and demand for personal computers has fallen sharply from the pandemic highs, when companies and families purchased laptops to work and study from home. In October, Amy Hood, the company’s finance chief, told investors that the slowdown in consumer PC sales that started in September would continue through at least June.