Microsoft has confirmed performance-based job cuts affecting less than 1% of its global workforce, which totals approximately 228,000 employees, according to a report by CNBC. The redundancies are being carried out across multiple departments as part of the company’s strategy to optimise its talent pool and enhance overall workforce performance.
A spokesperson for Microsoft stated that the company remains committed to maintaining high standards across all teams and has taken necessary steps to address cases where employees did not meet expected performance benchmarks. While these layoffs represent a small fraction of its workforce, they align with a broader trend of increasing scrutiny on employee performance within large technology firms.
The cuts reportedly affect several divisions, including the security segment. Managers across the organisation have been tasked with evaluating employee performance at all levels in recent months, culminating in these redundancies. This indicates a more rigorous approach to performance management within Microsoft’s operations.
These layoffs follow earlier workforce reductions at the company. In January 2023, Microsoft announced plans to eliminate 10,000 jobs, equating to approximately 5% of its workforce at the time. Additional rounds of cuts included nearly 2,000 employees from its gaming division following the $75.4bn acquisition of Activision Blizzard, and approximately 1,000 roles in its Azure cloud computing unit as part of wider cost-management and restructuring efforts.
Despite these workforce adjustments, Microsoft’s financial position remains robust, with a reported net income margin of 35.61%, underscoring its strong profitability. However, Microsoft’s stock performance has been modest, rising by 12% over the past year, compared to the S&P 500’s 23.3% gain during the same period.
The redundancies occur amid a broader wave of workforce adjustments within the technology sector, driven by economic challenges and rapid advancements in artificial intelligence (AI) and automation. Industry analysts have highlighted a growing trend of businesses recalibrating their workforce structures to adapt to technological shifts. A World Economic Forum study forecasts that 41% of businesses will reduce their staff within the next five years due to increasing reliance on AI.
While Microsoft has not disclosed detailed information regarding the geographical or departmental distribution of affected roles, the company remains focused on aligning its workforce with long-term strategic goals. Investments in innovation, particularly in cloud computing, AI, and emerging technologies, continue to be a priority.
Tech layoffs surged in 2024 amid restructuring efforts
The year 2024 was a challenging period for the technology sector, with over 150,000 job cuts reported across 545 companies, according to Layoffs.fyi. These layoffs were largely attributed to economic pressures, technological advancements, and shifting business priorities.
Google led the year’s workforce reductions with 12,000 layoffs, equivalent to 6% of its global workforce, citing efforts to optimise resources. Intel followed, announcing plans to cut approximately 15,000 jobs, or 15% of its workforce, as part of a $10bn cost-saving initiative aimed at revitalising its manufacturing operations and advancing its position in the AI chip market. Dell Technologies also announced substantial layoffs, reducing its workforce by 12,500 employees, or 10%, as part of a strategic reorganisation to focus on artificial intelligence investments.
Cisco continued its workforce restructuring with a second round of layoffs in 2024, impacting over 4,000 employees as it redirected efforts towards high-growth areas such as cybersecurity and AI.
Meta scaled back its UK operations, cutting 715 roles, while Apple reduced its digital services workforce by around 100 positions, affecting teams working on its News and Books apps. Dropbox also announced workforce reductions, cutting over 500 jobs, or 20% of its staff, amid slowing growth in its core storage business.
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