Microsoft announced that it would separate 5% of its workforce, or about 10,000 people. The first dismissals mainly concern teams devoted to projects related to extended reality: a surprising strategy at a time when some have only one word in their mouths, “metaverse”.
Microsoft announced staff cuts last week; the company has taken action to cut 10,000 jobs, which represents approximately 5% of its workforce. This major redundancy plan will be finalized before the end of the first quarter. Cost of these dismissals for the company, including severance pay: approximately 1.2 billion dollars. In a letter titled Subject: Focusing on our short- and long-term opportunitySatya Nadella, CEO of Microsoft, explains the motivations that led to this decision.
Microsoft anticipates a drop in demand
Satya Nadella writes: “We live in a period of significant change, and when I meet with clients and partners, certain things are clear. First, while we’ve seen customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less. We are also seeing companies across all industries and geographies treading cautiously as some parts of the world are in recession and others are anticipating one. At the same time, the next great wave of computing is being born through advances in AI, as we transform the world’s most advanced models into a new computing platform.
It is in this context that we, as a company, must strive to deliver results on an ongoing basis, while ensuring our longevity. I am convinced that Microsoft will emerge stronger and more competitive […]. »
Despite this massive downsizing, Microsoft “will continue to hire in key strategic areas,” including artificial intelligence. A few weeks ago, the CEO declared in particular at the microphone of CNBC that India was the new El Dorado for companies, “an exception” in a world in crisis. If you allow us a small digression, let us also point out that labor in India is very inexpensive (less than in China) and that, beyond the myth of the Indian developer, the famous AIs are essentially driven by anything but artificial human beings, recruited by subcontractors in this kind of country.
Intel and Microsoft reportedly resumed supporting their products in Russia
Extended reality, not owned by Microsoft?
Be that as it may, the layoffs have therefore begun, and the messages posted by former Microsoft employees allow us to see quite clearly as to the sectors of activity concerned by this downsizing. The Redmond firm did not operate in small cuts made in different departments, but got rid of entire teams. This is the case of those who have worked on the HoloLens, AltSpaceVR and MRTK (Mixed Reality Tool Kit) projects. Basically, virtual and augmented reality technologies linked to the metaverse, which some see as the future of the Internet.
The team behind AltspaceVR, for example, a virtual reality platform acquired by Microsoft in 2017, tweeted that AltspaceVR would “shut down on March 10.”
We can’t see Microsoft abandoning this sector. Afterwards, the company may believe that it has fallen too far behind its competitors and is throwing in the towel, as it had done for Windows Phone. The other hypothesis is that the company is simply carrying out an internal reorganization, gathering its forces around a few projects, rather than advancing them in a disorganized manner on a multitude of sketches.
Sources: Windows, Tom’s Hardware USA, Windows Central
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10,000 layoffs at Microsoft, many involving extended reality teams
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