Microsoft acknowledged to CNBC on Wednesday that it is reducing a small proportion of positions across divisions depending on performance.
In an email to CNBC on Wednesday, a Microsoft representative stated, “At Microsoft, we focus on high-performance talent.” “We’re constantly trying to help people develop and learn. We take the proper steps when individuals are not performing.
The plans were revealed by Business Insider late Tuesday.
Less than 1% of workers will be impacted by the layoffs, according to a source with knowledge of the situation who asked not to be identified in order to protect confidential information.
At the close of June, Microsoft employed 228,000 people. Microsoft’s stock lagged its rivals last year, climbing 12% while the Nasdaq gained 29%, despite the company’s net income margin of over 38% being close to its highest since the early 2000s.
When compared to other downsizing initiatives, Microsoft’s most recent layoffs are minimal.
The corporation consolidated leases and lay off 10,000 workers at the beginning of 2023. Three months after closing the $75.4 billion Activision Blizzard merger, Microsoft’s gaming division let off 1,900 employees in January 2024 in an effort to cut down on overlap.
Microsoft’s relationship with OpenAI, an artificial intelligence business that it has invested more than $13 billion in, is becoming increasingly precarious as 2025 gets underway. Last year, the collaboration helped push Microsoft’s market capitalization above $3 trillion.
Microsoft added OpenAI to its roster of rivals throughout the summer. In a podcast published last month, Microsoft CEO Satya Nadella referred to the relationship with investors Brad Gerstner and Bill Gurley as “cooperation tension.”
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In the meanwhile, the OpenAI-powered Microsoft 365 Copilot assistant is still relatively new to the corporate world. In a note last month, UBS analysts expressed their opinion that Copilot rollouts “have been a bit slow/underwhelming” after attending Microsoft’s Ignite conference.
Microsoft continues to highlight its prospects for expansion. Amy Hood, the head of finance, stated in October that increased capacity for AI infrastructure will accelerate revenue growth from Microsoft’s Azure cloud in the first half of this year.
