Global technology giant Microsoft’s plans to cut 10,000 jobs globally are bound to have repercussions on its India operations, for which it employs around 20,000 people, experts said. The Indian team accounts for just under a tenth of Microsoft’s total headcount of 220,000. The jobs are spread across sales, marketing and research & development (R&D).
Rituparna Chakraborty, founder & executive director, Teamlease, a staffing solutions firm, observed that the global layoffs would surely have an India impact. “However, it is difficult to measure the quantum of the impact as no such trends have emerged. India today is a critical technology centre for Microsoft, so a lot of key employees are based in the country,” Chakraborty pointed out.
According to Harold D’Souza, co-founder and director, WalkWater Talent Advisors, the slowdown in the tech industry and in the US stock markets are key reasons for the layoffs. “Companies across the tech industry are over-staffed and have over-paid for talent, and this effect was bound to happen. Not specific to Microsoft but the tech layoffs will have an impact on sentiment though the India story continues to be strong,” D’Souza said.
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Globally, several technology firms including Meta, Twitter, Salesforce and Amazon have announced layoffs in large numbers amid the possibility of an economic recession and high inflation. Other large corporations are clamping down on fresh hiring as they ready themselves for the slowdown.
Microsoft, which follows a July-June fiscal year, said the reduction of 5% of its workforce will take place through the end of Q3 FY23.
Experts also feel that the layoffs have now created a correction in the job market. They believe most major US companies will see rationalisation of workforces and that future hiring would reflect the real demand for talent, and would not be driven by irrational growth trends and overheated funding markets.
During his recent visit to India, Microsoft chairman and CEO Satya Nadella said the company is investing in building data centres in India to build solutions in India for the world. Microsoft plans to open a fourth data centre in Hyderabad by 2025, adding to its existing three data centres, one each in Mumbai, Pune and Chennai.
When FE asked Microsoft about the India impact, a spokesperson pointed to Nadella’s communication to employees titled ‘Focusing on our short- and long-term opportunity’ and said, “There is no separate India statement that we have to share.”
In his communication to employees, Nadella said, “First, we will align our cost structure with our revenue and where we see customer demand… Second, we will continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company, while divesting in other areas… As such, we are taking a $1.2-billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces.”
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Nadella added that “US-benefit-eligible employees will receive a variety of benefits, including above-market severance pay, continuing healthcare coverage for six months, continued vesting of stock awards for six months, career transition services, and 60 days’ notice prior to termination, regardless of whether such notice is legally required.”
Indicating that the layoffs could happen in India, he said that benefits for employees outside the US will align with the employment laws in each country.