Microsoft confirms performance-based job cuts across key divisions

Microsoft's restructuring plans began in 2023 with 10,000 layoffs, followed by 1,900 more in its gaming unit after the $75.4 billion Activision Blizzard acquisition

Global tech giant Microsoft has confirmed a “small percentage” of job cuts across various departments based on employee performance. The move was confirmed by CNBC on Wednesday, with the company emphasising its need to maintain high-performance talent.

 

“At Microsoft, we focus on high-performance talent,” a spokesperson told the news channel. “We are always working on helping people learn and grow. When people are not performing, we take the appropriate action.”

 

A day earlier, Business Insider reported on the upcoming job cuts. The company said it had been evaluating employees up to level 80, one of its highest tiers, with managers conducting assessments over the past few months.

 

While specific numbers of layoffs have not been disclosed, the cuts span the company, including its crucial security division. Microsoft, which had approximately 228,000 full-time employees at the end of June 2024, often backfills roles vacated due to performance issues, minimising the impact on overall headcount.

 

Despite these cuts, Microsoft’s financial performance remains strong, with a net income margin close to 38 per cent. However, its stock performance has lagged behind its peers, rising only 12 per cent last year compared to the Nasdaq’s 29 per cent gain.

 

Job cuts in IT sector

Microsoft’s recent job cuts are part of broader restructuring efforts. In early 2023, the company laid off 10,000 employees, followed by 1,900 job cuts in its gaming unit after the $75.4 billion acquisition of Activision Blizzard.

 

The company continues to explore growth opportunities in artificial intelligence (AI) and cloud services.

 

Microsoft’s actions reflect broader trends in the tech industry. Google, for instance, reduced its management roles by 10 per cent last month as part of an ongoing efficiency drive. This followed a historic round of layoffs in January 2023, when 12,000 employees were let go.

 

Google’s cost-cutting push began in 2022, when CEO Sundar Pichai announced plans to make the company 20 per cent more efficient.