Performance-based layoffs hit Microsoft workforce

Microsoft announced a new round of layoffs affecting less than 1% of its global workforce, based on performance evaluations. The job cuts span multiple departments, including the security division, as part of the company’s ongoing efforts to focus on high-performance talent.

A Microsoft spokesperson stated, “At Microsoft we focus on high-performance talent. We are always working on helping people learn and grow. When people are not performing, we take the appropriate action.” The company confirmed the job cuts to CNBC but declined to specify the exact number.

Following this latest announcement, Microsoft employees number around 228,000, down from a peak of approximately 236,748 two years ago. The company previously cut 10,000 jobs in January 2023, which represented about 5% of its workforce. Additional layoffs occurred in 2024 after the $75.4 billion acquisition of Activision Blizzard, with nearly 2,000 jobs eliminated in its gaming division to reduce redundancy.

Upcoming layoffs reflect a broader trend within the tech industry, where companies are emphasizing efficiency and performance management due to economic pressures. Analysts expect this trend to continue as companies refine their operational strategies.

41% of global firms plan layoffs by 2030 due to AI

Amidst the layoffs, Microsoft is also pushing forward with its commitment to artificial intelligence (AI) development. During a recent visit to New Delhi, Chairman and CEO Satya Nadella announced an initiative to train 500,000 individuals in rural India in AI skills, emphasizing the country’s significance in the global AI landscape. Nadella stated, “There’s tremendous progress in AI skilling in India,” highlighting Microsoft’s commitment to innovation and growth.

Despite the performance-based layoffs, Microsoft remains focused on growth opportunities in cloud computing and AI. The company has invested over $13 billion in its partnership with OpenAI, which has helped propel its market cap past $3 trillion. However, the relationship has faced challenges, with Microsoft CEO Satya Nadella referring to it as “cooperation tension” during discussions with investors.

In October 2024, CFO Amy Hood expressed expectations that revenue growth from Microsoft Azure would accelerate in early 2025, supported by enhanced AI infrastructure capacity.

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