His stark warning comes as the US Congressional Budget Office estimates a 12.3 point increase in the unemployment rate putting 21 million employees newly out of work.
“It is a staggering number. The pandemic respects no border. Many other countries and continents face similar challenges,” Smith told the BBC.
Millions will need to learn new digital skills to get jobs or retain their existing employment, according to the tech giant boss.
Microsoft recently announced plans to deliver skills and training to 25 million people across the globe with the help of its subsidiary company LinkedIn.
It will spend $20m (£19.6m) on the programme. The software company estimates the global workforce can absorb around 149 million new technology-oriented jobs.
But Smith admitted many global jobs would be beyond the reach of digital retraining.
“It’s true that the nature of work varies widely around the world. Not all jobs can be digitised, particularly in the developing world.
“We live in a world of internet inequality – if we don’t do something about it we are going to exacerbate all the other inequalities that we all worry about. This is a task beyond any one company or any one government but if we can reach 25 million people we will feel like we are doing our part.”
He emphasised that it was a crucial moment for technology which could be a “formidable weapon” in the wrong hands.
“To ensure that technology is a force for good, governments need to move more quickly to develop technology-focused laws. While tech companies need to exert some self-restraint,” he added.
But there are concerns that advances in technology could lead to greater job losses as automation takes over.
“Fundamentally the responsibility of companies and countries is to make sure that people have the skills to ensure they reap the benefits rather than suffer from the consequences of the changes unleashed,” added Smith.