Microsoft Rumored to Cut Suzhou Division in China, Future Adjustments Inevitable

Reports surfaced recently alleging that Microsoft will cut its Suzhou division in China, implementing large-scale layoffs with compensation of over 12 months in salary, stock lifting and one year of social security benefits. However, according to domestic media outlet China Star Market, several independent sources confirmed that the news was not true.

In January, Microsoft announced that due to the poor economic situation and changing customer needs, it will lay off 10,000 people worldwide by the end of March, accounting for about 5% of its total number of employees.

Suzhou hosts an important innovation team for Microsoft’s operations in China. Within the industry, this division is known to have “more money, less work and better social care.” It was established in July 2013, and its current number of employees with social security benefits is 2,583.

An employee at the Suzhou division said that China will be impacted by Microsoft’s large-scale layoff plan, but Microsoft Suzhou has nearly 3,000 employees in its R&D center alone, and it is impossible for the firm to cut the entire division. Another employee said that the second phase of building at Microsoft Suzhou was completed in May last year and employees will be moved in in June this year, while the third phase of the building has already started construction.

SEE ALSO: Microsoft to Cut 10,000 Jobs, Affecting Chinese Division

Nonetheless, future adjustments and optimization are beyond doubt. Another employee said that some fresh graduates were not given full employment, and resources in China were being withdrawn.

Regarding the matter, Wang Yongdong, the senior vice president of Microsoft Global and chairman of its Asia search technology center, sent an internal email to dispel rumors, saying that he wasn’t aware of any plan to close the Suzhou site. Wang claimed in the email that he usually does not respond to similar rumors, and this exception was due to a large number of inquiries. He called on employees to return to work, focus on customers, and not waste precious time on such baseless rumors.

Earlier, Microsoft said that global layoffs and related changes would cause the company to lose $1.2 billion in revenue in the fourth quarter of 2022. The layoffs are in response to “changes in the macroeconomic situation and customer priorities.” In addition, the company will adjust a series of hardware systems and integrate the rented office space.

With this wave of layoffs, human resources and business jobs were the hardest hit areas, and a small number of technical R&D employees were also affected – mainly those exhibiting poor performance. Microsoft’s metaverse social AltSpaceVR and HoloLens head display teams have been hit hard, and several project teams have been disbanded.

Since the second half of last year, American technology giants Google, Amazon and Meta have successively released large-scale layoff plans.

According to the latest financial report, Microsoft’s performance has not been as good as expected. In the second quarter of fiscal year 2023 ended December 31, 2022, the firm’s core personal computing business including Windows, Xbox, Surface and search advertising had revenue of $14.24 billion, down 19% year-on-year. As customers reduce cloud spending, the growth of Azure, the key cloud business driving Microsoft’s performance growth, also slowed to 31%. Satya Nadella, CEO of Microsoft, predicted that the cloud business may slow down by another four to five percentage points in the next six months.