Microsoft confirmed Monday evening that it cut jobs across the company, citing its business priorities, and has fired 1,000 employes from different companies including, Xbox, Azure, etc. The tech giant would not say how many people had been laid off, nor which departments were impacted. One current employee told The Washington Post layoffs have also affected the Xbox gaming division. A Microsoft spokesperson told multiple agencies said;
“Like all companies, we evaluate our business priorities on a regular basis and make structural adjustments accordingly. We will continue to invest in our business and hire in key growth areas in the year ahead.”
Gaming industry veteran Greg Chapman confirmed layoffs of his Studio Alpha team on Twitter, before taking his account private. The team was what Microsoft called its “serious gaming initiative,” using cloud-computing service Microsoft Azure, artificial intelligence, and simulations to solve data problems for military and commercial use. Chapman declined to comment on this story. A Microsoft employee speaking on the condition of anonymity as she wasn’t authorized to speak to media said;
“I didn’t know what I expected in gaming. Azure is a big direction. Ultimately I thought that those areas and gaming were relatively safe.”
Microsoft also laid off employees hired as recently as a month ago. The news is a stark reminder of the ongoing layoffs in tech that have so far impacted 14,000 highly skilled employees from U.S.-based tech startups alone, according to Hirect.
Data from Crunchbase suggests that overall, more than 44,000 U.S-based tech workers have been handed the pink slip as of mid-October 2022. The flux stems from global efforts to cut down expenses as revenues and profitability decline due to decreased spending as early signs of an economic recession mount.
It’s not the first time the company has laid off employees this year, as tech companies tighten their belts in response to economic headwinds. In July, Microsoft laid off less than 1% of its staff of 180,000 across departments like consulting and customer solutions, according to Bloomberg. The company is also in the process of acquiring video game maker Activision Blizzard for a record nearly $70 billion, pending regulatory approval. The historic deal coupled with the job cuts drew scrutiny from onlookers.
Slowing demand for computing and storage resources has led to a slight decline in cloud revenue. Meanwhile, advertising on LinkedIn has also taken a hit, and so have PC sales (which, across the domain and not just Microsoft, slid by 19.5% YoY globally). Microsoft’s Q3 2022 (FY23 Q1) results are expected to be released next week. Among those laid off from Microsoft are the director of the test Greg Chapman, group product/program manager KC Lemson, and others.
While the gaming industry developed a reputation for being recession-proof during the 2008 recession, it has felt the pinch this year, after experiencing a significant boom in in-game sales and hours of gameplay earlier in the pandemic. Gaming titans Nintendo, Microsoft, and Sony all reported declining revenue and missed earnings expectations in late July or early August.
“The layoffs at Xbox are surprising, considering Microsoft’s push behind gaming, but it does rhyme with the current economic momentum,” said Joost van Dreunen, a lecturer on the business of games at New York University’s Stern School of Business.