Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent and require much more than just laying off the unneeded workers. It would suggest that large reforms are needed in planning and hiring. But these days it's just dismissed as an "oops!".

They wanted 11,000 extra heads when the market was rewarding growth.

Now that the market is rewarding bottom lines - they don't want 11,000 extra heads anymore.

It's easy to "blame the Fed" for the market rewarding the bottom line. But we forget that the reason the market was so crazily rewarding growth 2 years ago was also... because of the Fed.

MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them.

If the stock isn’t moving, perhaps the news is already priced in.

So either insider trading or a lot of people guessing they’d do a big layoff at some point?

Microsoft stock has been incredibly volatile though in the past year.

> MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them.

It's always hard to distinguish signal vs noise in stocks, but it has gone up 0.5% in 24 hours, which is a $8bn raise on the market cap.

Cutting $3bn in wages is never going to radically change the market cap of a $1.7T company (you hope!).

Hard to say if the market was expecting layoffs.

They clearly did need/want them at some point. And then things change.

“When the facts change, I change my mind. What do you do?”

no hiring process fires 100%. a healthy company deals with that reality incrementally. since many companies have adopted a policy of just generally not firing anyone for performance reasons, they just accrete these people, and when the opportunity arises (i.e. merger), they vent them en masse. I guess its easier to deal with the emotional/morale issues? probably legal too.

> many companies have adopted a policy of just generally not firing anyone for performance reasons

Not sure if that's true. For example, out of FANNG afaik only G would be least likely to fire ppl, they gave very generous chance to employees to improve and would only do 'piping' as the last option. But all the others have various forms of stack ranking and aggressive piping mechanism.

I would assume many other companies do the same

> Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent

Not really, Big Tech was in an 'arms' race the last decade where they felt if they did not hire people the competition would and they would be worse off in the long run. They all did this. Hence why everyone is trimming the fat as soon as the bubble showed an inkling of popping.

Everyone over hired, over paid, and didn't innovate with it enough to make up for the spending.

There are tons of people at these companies that can be let go.

Or, it means that they didn't forsee the economy going down to the extent it has. Corporate finances work like any large investment company. How much cash do you have on hand, how much is it earning per year, what is your revenue.

If you suddenly are getting 10% less from investments and possibly less from revenue due to a severe economic downturn, then you need to save 10% in costs somewhere, and for tech companies people are always the biggest cost.

There is no conspiracy here. You may wish that these large companies would have seen a recession coming, but that's not a very realistic wish.

There's no recession, though. There may be one this year, but it didn't exist before all of these layoffs. It may not be a conspiracy, but it seems questionable to believe these companies are not willing a recession into existence through, charitably, pessimism.

I think it is less pessimism and more realism. The fed clearly indicated that it will raise rates until the market cools

As far as the Fed is concerned inflation, unemployment & GDP growth are all definitely higher priorities than the stock market.

I agree. I didn't mean to imply I was taking about stocks.

If the fed is shrinking economic investment until employment and inflation goes down, companies are preparing for slow growth.

The US economy shrank in the first 2 quarters of 2022, and is already forecast to shrink in the first 3 quarters of 2023. Whether it’s in recession or not is a technical issue for economists, but the reality for many companies is that they face a lot of challenges at the moment.

In tech particularly there was a boom as businesses moved online during the pandemic that’s shrivelled away with increasing interest rates and inflation.

There's definitely a recession, however it's hiding behind inflation and rising interest rates. The two trillion in reverse repos are why the recession is having a softer introduction than you may be used to seeing. Companies are both responding too and getting ahead of the equities crunch. The economy crashed and the recession started in full form in March of 2021. But reverse repos have allowed the fed to inject two trillion into equity markets behind the scenes and without the directed action that requires fund managers to rebalance.

For one, in many many companies layoffs start in HR/hiring themselves. If MS needed to hire a ton of people in 2020-2022 it’s not at all a sign of incompetence if they hired a lot of recruiters/other HR folks in that time to handle it, and then spin it down when they aren’t as busy hiring.

The same goes for marketing. If you are going to reduce your marketing spend you don’t need as many FTEs to work on it.

For engineering, MS is a lot more old school than some other tech companies. Internal transfers basically require re-interviewing, and a lot of people don’t have many transferable skills. MS could be better off (and employees even better off) if they directly laid off e.g. engineers working on Windows LTS rather than trying to find them roles in Bing.

Not saying layoffs are ever good, and the details of this one remain to be seen, but I don’t think a 5% layoff signals incompetence

A company that can't figure out what do with employees is just as much a warning sign.

It's a bad signal that Microsoft can't think of any development worth doing.

As customer of their tooling I can think of lots of stuff, but yeah management apparently not.

> Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent

Sure, but 2020 and 2021 were extremely abnormal.

There's nothing indicating that they hired 11,000 people they didn't need. Many of the people being cut have probably been there for a while but may no longer be needed. The article mentions HR staff being laid off which makes sense since the hiring boom in tech has vanished. I don't think you can draw any conclusions about bad management or mistakes from this, the economy and the tech sector are in a slump with practically every large employer trimming fat. This is just business as usual.

"Management should plan ahead."

*Microsoft lays off 11k in lead up to recession

"No, not like that."

I don't think there's any grand scheme to screw anyone over here. Growth was important and now the balance sheet is more important.

We could always start talking about tech unions and guaranteed severance packages and other employee protections but it seems silly to just brood about 'the management.'

You're thinking at a corporate efficiency level, which is why shareholders want layoffs.

To an individual manager, their pay is generally proportional to the number of reports, so the incentives are for them to hire.

The point is that yesterday, they did want/need these people. To make a broader point, when money was cheap all the tech companies expanded to use cheap money to make bets that would grow their revenue. Some of these were speculative, some of these were ill thought out. In the same way that some companies started stupid projects during the cheap money era (meta, I'm looking at you), there will be companies that cut good projects now that the markets are demanding efficiency. The ideal company doesn't start doing stupid stuff during the cheap money era, and continue to invest when rates go up, safe in the knowledge they're confident that their bets will pay off. The problem is CEOs are following the market, rather than making real decisions for themselves, which kind of makes you wonder... weren't they meant to be getting paid 399x the wage of the average employee because they're the best and the brightest, not just following the crowd. But they aren't the best and brightest and they are just following the crowd - which is why they're going to fire a load of people, because we pay them because the buck stops with them. And by them, I mean them firing us.

The buck stops with them because they keep on raking in the dollars, unlike the people they fire.

> Why would they spend any amount much less $3b or $10b to keep people they don’t need/want?

I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market.

However, society is comprised of people with family and a personal life and hopes and dreams and aspirations. Hiring someone has a profound impact on their life, and firing them moreso. There's the income aspect, but also the impact it has on where a person can live and consequently all roots their family have in a community. Hiring a person entails a tremendous social responsibility, and moreso firing them. Microsoft has a hefty amount of immigrants from all corners of the world, and some who have visas that limit the odds they can stay even in the country, let alone their community.

It's deplorable how a company can toy with someone's life like that just because some exec feels like it.

Is it neoliberalism specifically, or even just generally living in a capitalist society? (Which hey, I'm happy enough to live in a capitalist society, it has been good to me, but I definitely notice myself evaluating nearly everything through a financial or transactional lens).

I think it's very easy to live in a capitalist society and still treat people as human beings rather than financial instruments, but if you live like that you probably will not become CEO of Microsoft.

Its a tragedy of public education that people do not realise that there are different kinds of capitalism. After all, slave trade was capitalism too.

We just went through a massive transition from Kenzian to Neoliberal system, and nobody realised. The underperformance of Neoliberal system compared to its predessesor should be the biggest discussion point in all news.

Noone has even heard of shumpeterian theory.

Is the implication that some but not all kinds of capitalist societies would encourage or cause people to view many "normal" things (not just inherently or clearly transactional things) as transactional?

What would be the kinds of capitalism that would or would not cause a transactional mindset to seep into all parts of life?

Dont know why this got downvoted. HN to toilet.

This is an uncharitable take. The ability to fire at-will is the reason companies in the US are able to hire and pay as high as they do. As a dual-national Brazilian-American who has also spent years living in Europe, the social contracts are very different, and different people might value different things, but I'll take the downside layoff risk in exchange for upside in pay and mobility.

> This is an uncharitable take. The ability to fire at-will is the reason companies in the US are able to hire and pay as high as they do.

I feel there is no rational basis for this belief, and it's mostly guided by wishful thinking to fool yourself into believing that all this penance leads to some kind of salvation.

It doesn't.

There are highly paid professionals in other countries who benefit from higher worke protection laws and even public services like working national health services and free education. Virtually all European countries ensure greater workers protection and half have a higher human development index than the US, and FANG salaries in Europe often lead to far greater disposable income. Heck, I personally know a FANG who was forced to pay overtime for oncalls in europe while US workers only get the pager app and the shaft.

Also, being subjected to abuse is not a requirement for mobility. Mobility only requires that you can quit your job and apply for other positions. There is no piece in the equation that requires abusive revolving door hiring practices.

People should shed their victim mentality and stop fooling themselves on how the path to riches is through suffering. It isn't. Basic human decency doesn't need to be thrown out of the window. That's only a requirement to screw over workers out of their rights and livelihood.

>Heck, I personally know a FANG who was forced to pay overtime for oncalls in europe while US workers only get the pager app and the shaft.

It does not follow that it leads to greater disposable income. Retail workers in the US also get paid overtime yet their disposable income is nowhere close to that of exempt (no overtime) programmers. Basically, with the tax rates in most of Europe, one's disposable income would be less even if the nominal income had been as same as in the US but it is not even close so you are, at best, misinformed when you think you get greater disposable income.

> It does not follow that it leads to greater disposable income.

It wasn't supposed to. It was suppose to point out a concrete example of how stronger worker protection leads to being paid fairly for the work you do, while US workers are not.

Meanwhile, feel free to check how any FANG salary for software engineers in places like Seattle compares with the cost of living, and how the salaries for equivalent positions in European cities like Amsterdam, which also has a notoriously high real estate, lead to higher disposable income.

As someone who's always heard that US pays much better but never verified it, this was interesting to look into.

According to levels.fyi, 90th percentile in the Greater Seattle area [0] is $344-363k USD while 90th percentile in the Greater Amsterdam area is $162-170k USD [1]. Taking the mid point of both ranges, you make 2.13 times more in Seattle before tax. After tax, you get $244,933 in Seattle [2] and $118,078.95 in Amsterdam (with requisite conversions from/to USD when using the linked tool) [3], bringing the difference to 2.07x more take-home in the US.

The next step is to compare cost of living. I don't know which source is most reliable, and not all sources include international cities, but a Reddit comment suggested Numbeo so that's what I went with [4]. It reports that local purchasing power in Amsterdam is 18.1% lower than Seattle, while categorized prices in Amsterdam are anywhere from 18.8% (restaurants) to 39.3% (groceries) lower in Amsterdam. So it seems you would need to have to be paid quite a bit more than 50% of your US total compensation to achieve the same standards of living.

I'll spare the details because I didn't look too deeply, but I also did look into the cost of major purchases that people value - houses (3 beds) and cars (specifically the Polestar 2, which is an EV more on the luxury side). These things are definitely not half as expensive in Amsterdam as in Seattle.

So, I can only conclude that US workers do end up with higher purchasing powers despite less worker protection. While European workers do get a lot of benefits, many I probably don't even know about as I don't live there, Big N-tier companies (besides Amazon) usually have generous benefits like employer-paid health insurance that lessen the gap in benefits somewhat.

[0] - https://www.levels.fyi/t/software-engineer/locations/greater...

[1] - https://www.levels.fyi/t/software-engineer/locations/greater...

[2] - https://smartasset.com/taxes/washington-tax-calculator#L3MFa...

[3] - https://thetax.nl/?year=2022&startFrom=Year&salary=900&allow...

[4] - https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

I'm not sure why this represents a victim mentality or some kind of penance. I don't see it that way at all. It's simply risk/reward and understanding how the economic incentives work independent of moral judgements.

As a founder it's crystal clear: you quit your job, you start building a company with no salary, you get some traction, get some investment, and if you work hard and have a good dose of luck along the way you can be very successful (far more than any salaried employee), or you might fail and earn nothing.

Now you add employees, they are expensive and you don't really know what the business climate will look like over time. You know you need some to fulfill your growth potential, but where is the point of diminishing returns? There's no way to know. The Silicon Valley VC model is: if you get a whiff of product-market fit and think you have a potential category-defining product, pour as much money in as you can to maximize scaling—even if it is wasteful or risks flaming out, you do it anyway because otherwise someone else may do it and win.

Now, if you are in a country like France, worker protections mean that if you over-hire, you risk killing the entire company because you overshot your mark and you can't do layoffs. This absolutely plays into hiring plans, and if you don't acknowledge this then it is you who are engaged in wishful thinking.

Note that I don't have anything against worker protections, I liked living in Europe and there are a lot of things that are preferable to the States, but economic upside for programmers like me is not one of them. FAANG definitely broke through the old glass ceilings for tech folks, but A) that competition was introduced by American capitalism and B) even for FAANG it's still significantly higher total comp stateside.

Perhaps the best of both worlds is American mobility coupled with European public services, as the other post mentioned- "working national health services and free education." Not having to stress over lack of health insurance or ability to pay off student debut (and medical debt!) would go a long way towards making American layoffs less existential.

> it's mostly guided by wishful thinking to fool yourself into believing that all this penance leads to some kind of salvation.

Something similar leads to russian people to support Putin. They know that they are wrong, but the thought that they are wrong and all the suffering was for nothing is too terrifying for their subconcience to even ankowledge.

> I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market.

The only reason Neofeudalism didn't quite arrive is that its difficult to get rid of unprofitable serfs. A lord was actually sort of responsible for his territory.

Here you can dump unwantes on the state and voila, no responsebility!