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-performing talent,” a Microsoft spokesperson said in an email to CNBC on Wednesday. “We’re always working to help people learn and grow. When people don’t perform, 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 to discuss private information.

Microsoft had 228,000 employees at the end of June. While the company’s net income margin of nearly 38% is near its highest since the early 2000s, Microsoft’s stock underperformed its peers last year, rising 12% while the Nasdaq rose 29%.

Microsoft’s latest cuts are slim compared to 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, Microsoft’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 accelerate Microsoft’s market capitalization to over $3 trillion last year.

Over the summer, Microsoft added OpenAI to its list of competitors. Microsoft CEO Satya Nadella used the phrase “collaborative tension” while discussing the relationship with investors Brad Gerstner and Bill Gurley on a podcast published last month.

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

Microsoft still touts its growth opportunities. CFO Amy Hood said in October that revenue growth from Microsoft’s Azure cloud will accelerate in the first half of this year due to greater AI infrastructure capabilities.