Microsoft confirms performance-based job cuts across departments

In recent weeks, Microsoft has announced plans to cut a small percentage of jobs across departments, particularly targeting employees who are not meeting performance expectations. This decision is part of a broader strategy to ensure that the company prioritizes high-performance talent while also addressing any gaps that may exist due to underperformance. The company confirmed these upcoming job cuts through a spokesperson, stating that they are always focused on helping their employees learn and grow, but must take appropriate action when performance is lacking. The job cuts are expected to affect less than 1% of the overall workforce, which consisted of approximately 228,000 employees at the end of June 2024. Various divisions, including Microsoft's security sector and gaming unit, are anticipated to be impacted by these layoffs. Prior to this latest announcement, Microsoft had already conducted several rounds of layoffs in 2024, decreasing their workforce significantly in both their gaming and other divisions. In January, nearly 10,000 employees were let go, and there were additional layoffs throughout the year. As the market evolves and competition increases, particularly in the technology sector, Microsoft is refocusing its attention toward maintaining a competitive edge. Despite reaching a market cap of over $3 trillion, the company's stock performance has lagged when compared to its peers. The strategic adjustments, including the recent cuts, are seen as necessary for Microsoft to realign its workforce with its performance objectives. The announcement comes at a time when Microsoft is also navigating a complex partnership with OpenAI, a company they have invested more than $13 billion in. The relationship has become fraught with challenges, impacting Microsoft’s AI initiatives. The company's 365 Copilot assistant, which utilizes OpenAI technology, has not yet fully penetrated the business market, leading to concerns about its slow rollout. As Microsoft continues to face various pressures, including a dynamic labor market and the performance of new software technologies, these job cuts are indicative of a larger effort to sharpen the company's focus on driving performance and competitiveness in the tech industry.