Tech Layoffs Mount as Microsoft, Amazon Shed Staff
January 20, 2023
Software giant Microsoft on Wednesday became the latest major company in the
tech sector to announce significant job cuts when it reported it would lay
off 10,000 employees, or about 5% of its workforce.
Microsoft’s job cuts come just as e-commerce leader Amazon begins a fresh
round of 18,000 layoffs, extending a wave of other major cuts at Twitter,
Salesforce and dozens of smaller technology firms in recent weeks.
The phenomenon of job losses in the tech sector has global reach but has
been keenly felt in Silicon Valley and other West Coast tech hubs in the
United States. The website layoffs.fyi, which tracks job cuts in the tech
industry, has identified well over 100 tech firms announcing layoffs since
January 1 across North and South America, Europe, Asia and Australia. In
all, the website has counted more than 1,200 firms making layoffs since the
beginning of 2022.
In an interview at the World Economic Forum in Davos, Switzerland, on
Wednesday, Microsoft CEO Satya Nadella appeared to suggest that retrenchment
in the tech sector was a result of reduced consumer demand.
“During the pandemic, there was rapid acceleration,” Nadella said. “I think
we’re going to go through a phase today where there is some amount of
normalization in demand.”
He said the company would seek to drive growth by increasing its own
productivity. The interview took place before Microsoft officially announced
One major focus of the layoffs, according to multiple media reports, was the
division of the company that makes augmented reality systems, including the
company’s HoloLens goggles and the Integrated Visual Augmentation System,
which until recently were being developed in cooperation with the U.S. Army.
Later in the day in an email to employees, Nadella wrote, “These are the
kinds of hard choices we have made throughout our 47-year history to remain
a consequential company in this industry that is unforgiving to anyone who
doesn’t adapt to platform shifts.”
However, he signaled the company would continue hiring in areas such as
artificial intelligence that management believes are strategically
Also on Wednesday, Doug Herrington, head of Amazon’s global retail business,
said his company was restructuring to meet consumers’ demands but would
continue to invest in areas where it saw the potential for growth, including
its grocery delivery business.
Wayne Hochwarter, who teaches business administration at Florida State
University, described the layoffs at Microsoft and Amazon as examples of
businesses making adjustments to their workforces in the face of a changing
“I think they overestimated the trends in personal purchasing patterns, and
they thought, ‘OK, we're going to make sure we're not shorthanded,’” he told
VOA. “And then when things softened a little bit, they realized they had
hired too many people.”
He also warned against reading too much into the latest layoffs.
“I don't think the tech sector is going to heck in a handbasket,” he said.
“They may have reevaluated where things are going to go, but I don't see
this as a catalyst for sending us into economic deterioration, or anything
that's going to put a crimp on the economy.”
Looking to the future, Hochwarter said, the workforce changes are "probably
going to make them stronger companies.”
Weathering the storm
Margaret O'Mara, author of the book The Code: Silicon Valley and the
Remaking of America, told VOA that the current run of layoffs in the U.S.
was just the latest chapter in a long cycle of booms and busts in the tech
In some important respects, she said, it’s a story about more than just a
misreading of trends in consumer preferences.
“It's similar to other downturns, and there have been many — for every boom
there was a bust — in that their macro[economic] conditions have shifted,”
she said. “Tech is an industry that's very much fueled by investment capital
and the stock market.”
O’Mara said that over the last 10 years, with low interest rates and large
amounts of cash flowing through the economy, conditions have been
“extraordinary” for the growth of U.S. tech companies. As those conditions
change, so does the amount of money investors want to put into tech firms.
However, O’Mara, a professor of American history at the University of
Washington, said it was important not to look at conditions today as similar
to the catastrophic dot-com bust of 2000.
“Tech is many orders of magnitude larger than it ever has been before,” she
said. “We are talking about platform companies that are unlike the dot-coms,
which were very young and very frothy, and it was easy for their value to
collapse. They weren't providing the essential services … fundamental to the
rest of the economy.”
By contrast, she said, companies like Microsoft and Amazon have deep
connections to the broader U.S. economy and should be able to withstand the
current economic headwinds.
Difficult for H-1B visa holders
disproportionate share of workers in the U.S. technology sector are
non-citizens who hold H-1B visas, which allow companies to sponsor them.
Layoffs are particularly difficult for visa holders — the overwhelming
majority of whom are from India — because once their employment is
terminated, they have just 60 days to find a new sponsor. Otherwise, they
are required to leave the country.
Hochwarter said he thought companies would pull back on hiring H-1B visa
workers, at least for the time being.
“My sense is that because that takes a great deal of effort and energy on
the part of the employing organization, they're probably going to start
cutting down on those because they’re just not quite as needed,” he said.
On Wednesday, U.S. Secretary of Labor Martin Walsh, speaking at Davos,
bemoaned the state of U.S. immigration law, saying it denies the U.S. the
workers it needs to drive economic growth.
"We need immigration reform in America. America has always been a country
that has depended on immigration. The threat to the American economy long
term is not inflation, it's immigration," he said. “It's not having enough