Microsoft to skip salary hikes for full-time employees this year: Report

CEO Satya Nadella cited economic conditions and an investment in artificial intelligence as he informed employees about the change

Microsoft's CEO Satya Nadella informed employees via email on Wednesday that the company will delay giving salary hikes to full-time workers this year.

As revenue growth slows and clients rein in spending, the move is in line with Microsoft's efforts to cut costs. 

“We will maintain our bonus and stock award budget again this year, however, we will not overfund to the extent we did last year, bringing it closer to our historical averages,” Nadella wrote in the email, reported Rueters citing an insider.

Nadella added that performance bonuses for Microsoft’s top executives will be down considerably from last year.

Microsoft nearly doubled the budget for merit hikes and increased stock allocations for some employees last year as inflation spread throughout the economy. Compensation will appear more common this year.

In addition to his comments on pay, Nadella highlighted Microsoft’s effort to capitalize on a growing artificial intelligence market.

“We are clear that we are helping drive a major platform shift in this new era of Al, and doing so in a dynamic, competitive environment while also facing global macroeconomic uncertainties,” Nadella wrote in the email.

The software developer announced in January that it would eliminate 10,000 jobs or little under 5 per cent of its staff.

In recent months, downsizing has also occurred at tech businesses like Alphabet, Amazon, Meta, and others.