Microsoft cuts more jobs, this time apparently based on performance

Microsoft has once again announced job cuts, marking the latest round of layoffs in the tech giant’s ongoing restructuring efforts. The company stated these cuts are performance-based and will impact less than 1% of its global workforce, which stood at around 228,000 employees as of mid-2024.

A Microsoft spokesperson explained, “We focus on high-performance talent… When people are not performing, we take the appropriate action.” The layoffs span multiple departments, including key divisions like security.

Reports also suggest that even senior-level employees may be among those affected. However, Microsoft has indicated it plans to replace these roles with new hires, keeping its overall workforce stable.

These latest reductions add to a series of layoffs under CEO Satya Nadella. In January 2023, Microsoft eliminated 10,000 jobs, about 5% of its workforce, during a significant restructuring effort.

Another 2,500 roles were cut in mid-2024, followed by nearly 2,000 gaming-related positions after the company’s $75.4 billion acquisition of Activision Blizzard. Such actions highlight Microsoft’s strategy of periodically reshaping its workforce to align with evolving business goals.

While Microsoft has emphasized its commitment to innovation and investment in emerging technologies like artificial intelligence and cloud computing, the layoffs come during a time of fluctuating stock performance.

Over the past year, Microsoft shares rose by 12%, trailing behind competitors like Amazon and Google, whose stocks gained 46.75% and 37.06%, respectively. Still, Microsoft maintains the largest market capitalization among the three, surpassing $3 trillion.

These workforce adjustments reflect a broader trend in the technology sector, where companies are increasingly scrutinizing employee performance and recalibrating their structures to adapt to technological advancements. In 2024, over 1,200 tech companies laid off approximately 260,000 workers, with major players like Intel and Tesla leading the pack.

Microsoft’s focus on reshaping its workforce is part of its strategy to stay competitive while navigating economic pressures and rapid advancements in artificial intelligence. The company remains optimistic about its growth opportunities, particularly in AI and cloud computing, as it enters 2025.