Microsoft is cutting a small percentage of jobs across departments based on performance, the corporate confirmed to CNBC on Wednesday.
“At Microsoft, we are focused on high-performing talent,” a Microsoft spokesperson said in an email to CNBC on Wednesday. “We are always working to help people learn and grow. When people don’t perform, we take appropriate action.”
Business Insider reported the plans late Tuesday.
The job cuts will affect lower than 1% of employees, said an individual aware of the matter who asked to not be identified to debate private information.
At the top of June, Microsoft employed 228,000 people. While the corporate's net profit margin is near its highest for the reason that early 2000s at nearly 38%, Microsoft shares underperformed its peers last 12 months, rising 12% while the Nasdaq gained 29%.
Microsoft's recent cuts are small in comparison with its recent downsizing efforts.
In early 2023, the corporate laid off 10,000 employees and consolidated leases. In January 2024, three months after completing its $75.4 billion acquisition of Activision Blizzard, Microsoft's gaming division cut 1,900 jobs to scale back overlap.
As we enter 2025, Microsoft faces a tougher relationship with artificial intelligence startup OpenAI, which the corporate has backed with greater than $13 billion. The partnership helped Microsoft's market capitalization rise to over $3 trillion last 12 months.
Over the summer, Microsoft added OpenAI to its list of competitors. Microsoft CEO Satya Nadella used the phrase “collaborative tension” when discussing the connection with investors Brad Gerstner and Bill Gurley a podcast published last month.
Meanwhile, the Microsoft 365 Copilot assistant, based on OpenAI technology, has not yet develop into widespread in business. Analysts at UBS said in a note last month that after Microsoft's Ignite conference, they felt the rollout of Copilot had been “somewhat slow/disappointing.”
Microsoft remains to be touting its growth opportunities. Chief Financial Officer Amy Hood said in October that revenue growth from Microsoft's Azure cloud would speed up in the primary half of this 12 months on account of greater capability in its AI infrastructure.
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