Microsoft announced it will cut 5% of its workforce, or about 10,000 people. The first downloads are mainly about teams dedicated to projects related to augmented reality: a surprising strategy at a time when some have only one word in their mouth, “metaverse”.
Microsoft announced staff cuts last week; the company has taken action to cut 10,000 jobs, representing approximately 5% of its workforce. This major surplus plan will be finalized before the end of the first quarter. The cost of these layoffs to the company, including severance pay: approximately $1.2 billion. In a letter entitled Topic: Focusing on our short-term and long-term opportunitiesSatya Nadella, CEO of Microsoft, explains the motives that led to this decision.
Microsoft predicts a drop in demand
Satya Nadella writes: “We live in a period of significant change, and when I meet with customers and partners, a few 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 tread carefully 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 consistently deliver results 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 specifically stated on the CNBC microphone that India was the new El Dorado for companies, “an exception” in a world in crisis. If you’ll allow us a small digression, let’s also note that labor in India is very cheap (less so than in China) and that, beyond the myth of the Indian developer, the famous artificial intelligences are basically driven by anything but human beings artificial. recruited by subcontractors in this type of country.
Augmented reality, not owned by Microsoft?
Either way, the layoffs have begun, and messages posted by former Microsoft employees make it pretty clear which sectors of activity are affected by the downsizing. The Redmond firm did not operate on small cuts made in various departments, but got rid of entire teams. This is the case of those who worked on the HoloLens, AltSpaceVR and MRTK (Mixed Reality Tool Kit) projects. Basically, virtual and augmented reality technologies are connected 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 be “shutting down on March 10th.”
We can’t see Microsoft abandoning this sector. The company may then believe it has fallen too far behind its competitors and ditch it, as it did with 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 pushing them forward in an order spread over a multitude of drafts.