Microsoft has confirmed it is implementing targeted job reductions affecting less than 1% of its 228,000-strong workforce, based on performance reviews. The tech giant emphasized these cuts are part of its regular process to maintain high-performing talent across the organization.
"At Microsoft we focus on high-performance talent," a Microsoft spokesperson stated, explaining that the company continuously works on employee development while taking "appropriate action" when performance standards are not met.
This latest round of cuts appears modest compared to Microsoft's previous workforce reductions. In early 2023, the company eliminated 10,000 positions and consolidated office space. More recently, following the $75.4 billion Activision Blizzard acquisition, Microsoft's gaming division cut 1,900 jobs in January 2024 to reduce organizational overlap.
Despite maintaining a healthy net income margin of nearly 38%, Microsoft's stock performance in the previous year lagged behind the broader tech sector, rising 12% compared to Nasdaq's 29% gain.
The company continues to navigate strategic challenges, including its evolving partnership with AI startup OpenAI, in which Microsoft has invested over $13 billion. CEO Satya Nadella recently described this relationship as having "cooperation tension."
Looking ahead, Microsoft maintains an optimistic outlook, with CFO Amy Hood projecting accelerated revenue growth in the Azure cloud division during the first half of 2024, driven by expanded AI infrastructure capacity.