Microsoft cuts a small percentage of employees as the new fiscal year begins

Satya Nadella, CEO of Microsoft Corp., speaks at a panel session on the second day of the World Economic Forum in Davos, Switzerland on May 24, 2022.

Holly Adams | Bloomberg | Getty Images

Microsoft said on Tuesday it had cut a small number of workers, days after the software maker kicked off its 2023 fiscal year, when the company normally announces structural changes.

Big and small technology companies have slowdown in hiring plans or announced workforce cuts in recent months to endure possible economic downturnwhich central banks are trying to prevent by raising interest rates. This shift made investors less interested in growth stocks such as Microsoft, whose shares are down about 22% since the start of the year, while the larger S&P 500 is down 19% over the same period.

The cuts span various groups and affect less than 1% of the company, which had 181,000 employees as of June 2021, the company said in a statement.

“We notified a small number of employees today that their roles have been removed,” a Microsoft spokesperson said in an email to CNBC. “This was the result of a strategic reorganization and, like all companies, we regularly evaluate our business. We continue to invest in certain areas and increase headcount next year.” Bloomberg previously announced the move.

Microsoft’s chief executive in charge of Office productivity software, Rajesh Jha, told his team in May: get permission before opening new roles. In June, Microsoft cut earnings and earnings forecastreferring to the unfavorable exchange rate.

On Monday, the technology industry research group Gartner rated that PC shipments, a factor affecting Microsoft’s Windows operating system business, fell nearly 13% in the third quarter, the lowest in nine years, due in part to geopolitical concerns.

The last time Microsoft announced mass layoffs was in 2017, after the start of a new fiscal year. The company laid off thousands of employees adjusted the approach to sales.

facebook parent Platform meta lowered the goal of adding software engineers this year from 10,000 to around 6,000-7,000, Reuters reported last week. Amazons the retail division also lowered its hiring target for 2022, insider reported in May.

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