Microsoft is cutting 10,000 workers, almost 5% of its workforce, in response to “macroeconomic conditions and changing customer priorities”, CEO Satya Nadella confirmed in an internal mail sent to employees on Wednesday. 

The company said in a regulatory filing earlier on Wednesday that it had just notified employees of the layoffs, some of which begin immediately. In his letter to the employees, Satya Nadella said he is confident that Microsoft will emerge from this situation, but “it requires us to take actions grounded in three priorities”.

The company said it will also be making changes to its hardware portfolio and consolidating its leased office locations  all of which are designed to save about $1.2 billion.

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These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts,” the email read.

“We will continue to invest in strategic areas for our future, meaning we are allocating both our capital and taken to areas of secular growth and long term competitiveness for the company while divesting in other areas,” Nadella wrote.

Microsoft will be taking a $1.2 billion charge in Q2 related to severance costs, changes to the hardware portfolio etc.

Satya Narayana Nadella is an Indian-American business executive. He is the executive chairman and CEO of Microsoft, succeeding Steve Ballmer in 2014 as CEO