Microsoft confirms performance-based job cuts across departments

Microsoft is cutting a small percentage of jobs across departments, based on performance, the company confirmed to CNBC on Wednesday.

“At Microsoft we focus on high-performance talent,� a Microsoft spokesperson said in an email to CNBC on Wednesday. “We are always working on helping people learn and grow. When people are not performing, we take the appropriate action.�

Business Insider reported on the plans late Tuesday.

The job cuts will affect less than 1% of employees, said a person familiar with the matter who asked not to be named in order to discuss private information.

Microsoft had 228,000 employees at the end of June. While the companyâ€s net income margin of nearly 38% is close to its highest since the early 2000s, Microsoftâ€s stock underperformed its peers last year, rising 12% while the Nasdaq gained 29%.

Microsoftâ€s latest cuts are slim compared with recent downsizing efforts.

In early 2023, the company laid off 10,000 employees and consolidated leases. In January 2024, three months after completing the $75.4 billion Activision Blizzard acquisition, Microsoftâ€s gaming unit shed 1,900 jobs to reduce overlap.

As 2025 begins, Microsoft faces a more tenuous relationship with artificial intelligence startup OpenAI, which the company has backed to the tune of more than $13 billion. The partnership helped propel Microsoftâ€s market cap past $3 trillion last year.

Over the summer, Microsoft added OpenAI to its list of competitors. Microsoft CEO Satya Nadella used the phrase “cooperation tensionâ€� while discussing the relationship with investors Brad Gerstner and Bill Gurley on a podcast released last month.

Meanwhile, the Microsoft 365 Copilot assistant, which draws on OpenAI technology, has yet to become pervasive in business. Analysts at UBS said in a note last month that they came away from Microsoftâ€s Ignite conference with the impression that Copilot rollouts “have been a bit slow/underwhelming.â€�

Microsoft is still touting its growth opportunities. Finance chief Amy Hood said in October that revenue growth from Microsoftâ€s Azure cloud will speed up in the first half of this year because of greater AI infrastructure capacity.