Nearly 5% of Microsoft's staff worldwide would be affected by the layoffs, the company claimed.
Microsoft CEO Satya Nadella wrote in a note to staff on Wednesday, "We're seeing customers optimize their digital investment to achieve more with less, just as we saw customers accelerate their digital spend during the epidemic."
As certain regions of the world are experiencing a recession and others are preparing for one, he continued, "we are also seeing firms in every industry and region exercise caution."
The business estimated a $1.2 billion charge as a result of employment layoffs, changes to its product portfolio, and consolidation of its real estate holdings.
Job layoffs have been made across the tech sector, including at huge companies like Amazon and Facebook-parent Meta, as a result of the slump in the sector, which was characterized by a 33% decline in the Nasdaq last year.
Microsoft stated in a filing with the Securities and Exchange Commission that the layoffs are a result of "macroeconomic factors and changing consumer preferences."
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The action comes after a round of layoffs in October that resulted in the loss of over 1,000 employment.
In response to the news, Microsoft shares decreased by almost 1% in early trade on Wednesday.
An inquiry for comments was not immediately answered by the business. Around 221,000 people work for Microsoft worldwide.
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Top tech companies' sales have slowed down from the pandemic's frenzied speed when billions of people were pushed into isolation. Customers who were stranded at home began to rely on delivery services like online shopping and virtual relationships created through social media and videoconferencing.
Experts believe the business has been battered by persistent recession fears, rising interest rates, and a return to a pre-pandemic lifestyle.
On the same day that Amazon launched a months-long wave of layoffs that will ultimately result in the termination of 18,000 employees, Microsoft announced its own round of layoffs. In a statement to staff earlier this month, Amazon CEO Andy Jassy warned that the company was prepared to make further layoffs.
Jassy identified the "uncertain economy" as the main cause of the job reduction in the memo.
"We don't take these decisions lightly or underestimate how much they could influence the lives of those who are touched," an Amazon official said, adding that the company is "fully aware that these role eliminations are difficult for people."
Major tech firms have eliminated hundreds of thousands of jobs over the past year. Twitter, Lyft, Stripe, Salesforce, Coinbase, and Robinhood are among the businesses that have made layoffs.
It's showtime for our industry and for Microsoft at this particular point in time, the beginning of 2023, Nadella remarked. "As a business, we must match our success with that of the world."
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