Microsoft to lay off 11k employees

Bloat is real, but there&#x27;s another labor market dynamic in play here.<p>There was a huge run-up in corporate employee compensation in the tech sector over the last few years. (Some called it a &quot;shortage,&quot; remember. Some of it is genuine growth in the sector, some of it was definitely &quot;labor hoarding&quot; by large companies that could afford to carry excess staff in a tight market as a hedge against being unable to fill critical roles - or to deny talent to competitors.)<p>While I would be surprised to learn of explicit collusion to suppress wages (unlike the _In re: High-Tech Employee Antitrust Litigation_ case,) collusion is not needed. The more tech employers lay people off, the more incentive there is for the next large tech employer to announce a layoff, and that&#x27;s discoverable without collusion. In the aggregate, the benefit to flooding the market to reduce employee bargaining power offsets potential loss of critical talent, because it drives down the cost of acquiring new talent.<p>The &quot;war for talent&quot; quickly turns to the &quot;war on talent.&quot;

I&#x27;m wondering what data really drives the back-and-forth at big tech. We&#x27;ve seen google, amazon, microsoft, meta, etc.. do hiring freezes, then layoffs. Hiring freeze, then back open, or layoffs then more layoffs later.<p>I would expect a longer term plan than just looking forward or backwards one quarter which seems like what has been happening the last year. I would assume they had better information and insights than common investors, but the activity out of these companies in relation to hiring and layoffs has seemed to be as sudden as people changing their stock allocations.

Just last week MSFT nixed the accrual PTO benefit employees enjoyed and opted for the rouse of &#x27;unlimited&#x27; PTO. Effectively, ending a liability&#x2F;cash outlay they would pay when folks quit, or get fired. I hope those who were affected today receive severance that makes up for them losing this benefit.<p>-James

&gt; The company had 221,000 full-time employees, including 122,000 in the United States and 99,000 internationally, as of June 30, according to filings.<p>The size of these organizations always catch me off guard. 11,000 is a huge number but 221,000 is even more staggering!

11,000 people - let&#x27;s say an average loaded cost of $250k&#x2F;yr. That&#x27;s... ~$3b&#x2F;yr these folks cost MSFT. Granted, it&#x27;s per year, but ... keeping these people on for another 3 years would cost ~$10b.<p>MSFT currently have $100b cash on hand. It&#x27;s gotta be a little... frustrating to get be part of a 5% cut when there&#x27;s so much free cash sitting around. I know, it&#x27;s a narrow view of corporate finance, and I don&#x27;t have the &#x27;big picture&#x27;, but... still doesn&#x27;t sit right with me.<p>That said, I don&#x27;t know what severance packages people are being offered. That might help soften the blow for some folks.<p>EDIT: re one reply about people earning $250k. I indicated &#x27;loaded cost&#x27; - health insurance, likely some cost of options&#x2F;stock, retirement matching, FICA and more. I possibly could have removed &#x27;average&#x27;. I suspect many of the folks being cut have on paper salaries (well?) below $200k. Is the 11k number global or US only? Round the number down to $200k. It&#x27;s closed to $2.2b&#x2F;year then.

Microsoft, Apple and Alphabet are sitting on extremely profitable businesses and huge piles of cash. (Other megacaps like NVDA, Meta, NFLX, maybe less so.)<p>So far we have not seen much in the way of the highly-anticipated earnings decline, and the current projection for Q4 GDP is around 4% growth, which suggests to me that Q4 earnings should be better than anticipated by the pessimists out there.<p>I would see this as a relatively painless opportunity to cut out low performers. Sure it sucks for those who are being cut, but my experience working at a FAANG tells me there are a lot more than 10% who contribute very little.

Corporate excellence programmes are about removing the bottom 10% of performers. However most mass lay-offs aren’t about that kind of performance, they are the answer to the question asked by the buy-side analyst: “If companyX spends 5% on areaY, and you spend 7%, where’s should I look for the benefit delivered in your results, because I’m not seeing it.” I’ve been there.

So one 1 out of 20 are getting let go. Looking around near 50 employee company I work for I easily see 2.5 employees I would let go just because they&#x27;re near useless. Hell, I&#x27;d say it&#x27;s at least 5.<p>I&#x27;d say unless you&#x27;ve got a good manager, really good hiring, and are keeping close tabs on the technical people (just to make clear, I&#x27;m one of them those technical people) I figure you&#x27;ve at least got 1 our of 20 you should just be sacking on principle.

I have a feeling Apple will be next - CEO announces he will be taking a huge pay cut in compensation was maybe an effort for him to preemptively show he is &#x27;sharing the pain&#x27; (though &#x27;only&#x27; 50M comp is not really much pain)

These layoff articles are incomplete without mentioning how many they hired and when. This brings Microsoft back to their staffing levels of when exactly? March 2021?

This is a curious decision. Microsoft shows a ~73 billion dollar net income [0] and it&#x27;s probably reasonable to assume their shareholders are enjoying a robust, growing business. I wonder what they believe this reduction in staff is meant to provide? Will this really and meaningfully move their bottom line or will it better tighten the performance characteristics of the staff?<p>[0] <a href="https:&#x2F;&#x2F;www.sec.gov&#x2F;ix?doc=&#x2F;Archives&#x2F;edgar&#x2F;data&#x2F;789019&#x2F;000156459022026876&#x2F;msft-10k_20220630.htm" rel="nofollow">https:&#x2F;&#x2F;www.sec.gov&#x2F;ix?doc=&#x2F;Archives&#x2F;edgar&#x2F;data&#x2F;789019&#x2F;00015...</a>

Not to offend anyone affected, but considering the cost&#x2F;profit structure of those big companies has not really changed that much (except, maybe, Meta), I get the feeling, that this round of layoffs is in some ways welcomed by those companies.<p>In many cases, they are basically returning to pre-pandemic levels and instead of an actual financial need, these layoffs are probably a result of the fact that you cannot effectively incorporate an headcount increase of 20% in a high-tech company within 1-2 years. It seems like they hired to please investors because everyone else was also hiring like mad. Since the shareholder expectations have reversed, the companies are using the &quot;opportunity&quot; to return to manageable numbers of engineers and administrators.

This isn&#x27;t a moral justification, but isn&#x27;t laying off workers when other companies have layoffs a simple supply and demand response? That is, the demand curve is the same for these workers but the supply curve shifts to the right and prices for the same job drops. They&#x27;re betting that the people hired in a recession will perform better per dollar than the people let go.

If you’re laid off from anywhere, are in a position to join a very early startup, love Texas Hold’em, and have technical or design experience, drop me a note.<p><a href="https:&#x2F;&#x2F;mach9poker.com&#x2F;" rel="nofollow">https:&#x2F;&#x2F;mach9poker.com&#x2F;</a>

I&#x27;ve survived multiple layoffs at various big tech companies in the 80s, 90s and 00s. I&#x27;m currently at Microsoft.<p>It&#x27;s always a bit of a gut clench. Ugh.

What sort of system exists for these monster layoffs that they can just (relatively) quickly patch the hole left by removing 11,000 people? I can&#x27;t comprehend what that looks like logistically.

Using employees as a profit buffer. Just another shitty way corporations work.<p>Somebody got a bonus for making this suggestion at Microsoft.

Always remember: your employer doesn’t give one single iota of a fuck about you when it’s convenient to get rid of you.

How to interpret this? MSFT felt like stablest FAANG

Granted that there are definitely people there resting and vesting and not contributing much. I get it. This still does not explain why all these big tech companies went on hiring spree when clearly they did not need that many people. And now they all: ops sorry, we did not know ...<p>I would like to see top managers bonuses&#x2F;refreshes and so on trimmed and maybe fired as well.

Here&#x27;s a dashboard we made keeping track of the economy. We&#x27;re now at a higher number of layoffs in January than any month in 2022 except for November<p><a href="https:&#x2F;&#x2F;app.plusdocs.com&#x2F;startup-funding-&#x2F;page&#x2F;clcgzzo551257608jm5a8kdd8o" rel="nofollow">https:&#x2F;&#x2F;app.plusdocs.com&#x2F;startup-funding-&#x2F;page&#x2F;clcgzzo551257...</a>

That&#x27;s just the first wave out of three. The first one are with the most severance usually as there is still more cash in the bank, so even though it sucks to get laid off you can look at the glass half full. Be strong everyone there!

How do layoffs like this happen? Every team cuts 5%? Wholesale elimination of teams?

Member when Carly Fiorina shut down HPs calculator division because it wasn&#x27;t PROFITABLE enough? Pepperidge Farms remembers. It&#x27;s not enough you make a company profit, it depends on the quality of that profit to the stock to determine if you are worth keeping around. There are some seriously broken things about that and about our modern economy.

Just some initial Googling shows they had roughly 144K employees in 2019 and ~221K in 2022. If you take out 11k, they still added 66K jobs in 3 years. I&#x27;d be curious to know the breakdown of the kinds of jobs they added vs the ones they&#x27;re now eliminating. The article says this cut affects mostly HR and engineering, but doesn&#x27;t give exact numbers, and it is hard to tell the breakdown for jobs added (unless someone smarter than me can find the info in the public filings).

unlimited time off plot twist

I was wondering to which year of employment level will all the lay-off roll back. For instance, FB has the same number of employees as they did back in Jan 2022 after the laid-off. Let&#x27;s say the employment level went back to 2018 for the tech industry, would it be a bad thing? The packages back in 2018 were still pretty cushy.

Pretty sure these layoffs are due to the rule..<p>&quot;There are three ways to make a living in this business; be first, be smarter, or cheat. Now, I don&#x27;t cheat. And, although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first.&quot;

&quot;Engineers not affected! &#x2F;s&quot;<p>Like I said before, no-one is safe. not even the FAAMNG companies.

Microsoft has been bribing enterprise executives with jobs, as part of their sales process.

Is it the staff of the Teams team? Worst product ever. One can&#x27;t even as a logged in user click on search results within the app without going into login hell.

Does Microsoft still do stack rank layoffs every year?

Possibly a purge of the people who predate mobile.

Well, this is a pointless move on their behalf.

How many employees did Microsoft add since the beginning of the pandemic. I know there was a lot of hiring during that time.

1. Too many humans - decision-making is slowed down &amp; and it&#x27;s expensive<p>Cut half - faster decisions, more money. Will you have more problems, Yes. But you&#x27;ll never know how bloated you were till you get lean again.<p>2. Too expensive humans<p>Most developers at FANGS can be replaced with mediocre devs in iowa or India. They will cut high-priced salaries soon and replace them with entry-level talent.

Reminds me of the LayOff Microsoft did in Q4 of 2014 where they laid off 18k

&gt; human resources and engineering divisions,<p>No lobbyists? Why am I not surprised.

honest question – Is this the danger of overpaying engineers $200k+ salaries?

It&#x27;s hard not to read some of these stories and not think that somehow some of these companies are free-riding on the ability to do some firings with minimal pushback because of the &quot;well, look at what everyone else is doing!&quot; climate that exists now. I&#x27;m having a hard time teasing out how much of this is driven by some sort of fundamental analysis of the economy, some collective BigCo CEO shared thinking, or, at my most cynical, an Overton window that&#x27;s been pushed outwards by Elon firing an extremely significant quantity of the (comparably tiny) workforce of Twitter with seeming negligible external-facing impact on the core product.

Every Big Tech collects bad hires and these are the best times to get rid of them.

Never let a good recession go to waste without firing people.

There was a