'Difficult, but necessary': Microsoft CEO Satya Nadella on sacking 10,000 employees

After Google, Amazon, and Twitter, tech giant Microsoft on Wednesday announced that it would fire 10,000 employees this year. In a letter to employees, Microsoft CEO Satya Nadella said the decision was difficult but necessary. He began his letter by saying: "We are living through times of significant change." During the pandemic, he said, customers accelerated their digital spending but they were now optimising their spending to do more with less. 

Nadella said that organisations in every industry and geography were now exercising caution as some parts of the world were in a recession and other parts are anticipating one. At the same time, he said the next major wave of computing was being born with advances in AI.

"This is the context in which we as a company must strive to deliver results on an ongoing basis, while investing in our long-term opportunity," he said as he announced the reduction in workforce. 

Nadella said Microsoft will align its cost structure with its revenue. "Today, we are making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3," he said. This represents less than 5 per cent of the company's total employee base. 

The CEO said the company will treat its people with dignity and respect, and act transparently. He said the decisions were difficult because "they impact people and people’s lives—our colleagues and friends". 

Spelling out the exit pay, Nadella said the US employees will receive a variety of benefits, including above-market severance pay, continuing healthcare coverage for six months, continued vesting of stock awards for six months, career transition services, and 60 days notice prior to termination, regardless of whether such notice is legally required. 

For rest, he said benefits for employees outside the US will align with the employment laws in each country.

The CEO said while the company was eliminating roles in some areas, it will continue to hire in key strategic areas. "We know this is a challenging time for each person impacted," he said.