Microsoft prepares to cut thousands of jobs as one of the world’s largest tech companies cuts its workforce amid a slowing global economy.
Sky News has learned that the US software giant could announce plans to remove a significant number of posts around the world in a matter of days.
Microsoftwhich employs more than 220,000 people, including 6,000 in the UK, is said to be considering cutting about 5% of its workforce which, if accurate, would equate to around 11,000 jobs.
That number could not be verified Tuesday night, and one analyst suggested Wall Street would be surprised if the number weren’t higher.
It was also unclear if or how many UK-based bodies could be affected.
The company, which has placed big bets on cloud computing growth and now has a market value of $1.78 trillion, will report second-quarter results next week.
When that is complete, an announcement about the downsizing is likely to be made before Microsoft’s chairman and chief executive Satya Nadella updates investors on January 24 on the financial performance.
A number of big tech companies have swung the ax in recent weeks, with Amazon this month announcing plans to cut 18,000 jobs, or about 6% of its workforce.
Salesforce, the cloud software provider, said it will cut 8,000 jobs, while Meta, the owner of Facebook, is cutting its workforce by about 11,000 jobs.
Big tech companies have been forced to respond to signs of a global economic slowdown as many hired tens of thousands of additional employees during the pandemic.
Image: Satya Nadella will update investors on Microsoft’s financial performance next week
Under Elon Musk’s ownership, Twitter also shed thousands of jobs, while PC maker HP shed 6,000.
Microsoft warned of a slowdown in its cloud computing business in October, a confirmation that large enterprise customers were reassessing their spending in response to economic challenges.
“In a world of increasing headwinds, digital technology is the ultimate tailwind,” Nadella said in October.
“In this environment, we are focused on helping our clients do more with less while investing in sustainable growth areas and disciplined management of our cost structure.”
The company has been transformed under Mr Nadella’s leadership, although the strength of the dollar has weighed on its profits in recent quarters.
It’s also battling with regulators to get approval for a £56billion takeover of Call Of Duty makers Activision Blizzard.
Last month, the company surprised investors by buying a £1.5 billion stake in the owner of the London Stock Exchange as part of a long-term cloud computing partnership.
Microsoft expects to generate $5 billion in revenue over the lifetime of the alliance.
Ahead of next week’s gains, Microsoft stock was downgraded to a sell rating by analysts at Guggenheim, who argued the numbers “could disappoint investors.”
“Although most investors see Microsoft as a large, stable company that can weather any storm, it has vulnerabilities, some of which this macro could exacerbate[economic] slowdown,” they wrote.
Responding to a request from Sky News, a spokesman said Microsoft “does not comment on any rumors or speculation.”