Satya Nadella, Executive Chairman and CEO of Microsoft Corporation, spoke at the “Microsoft Build: AI Day” event in Jakarta, Indonesia on April 30, 2024.
Ajdinar Ulfiana | Reuters
Microsoft The company plans to pause hiring at some of its U.S. consulting operations as it continues to look for ways to cut expenses, according to an internal memo.
The layoffs were announced a week after Microsoft announced the layoffs. According to a person familiar with Microsoft’s plans, these layoffs will affect less than 1% of the company’s employees.
While Microsoft said earlier this month it planned to continue investing in its artificial intelligence efforts, cost cuts elsewhere could lead to a rise in the company’s stock price. In 2024, Microsoft shares are up 12%, while the Nasdaq is up 29%.
The changes to the U.S. Consulting segment are intended to align with the policies of Microsoft’s Customer and Partner Solutions organization, which has approximately 60,000 employeesaccording to a page on Microsoft’s website. The changes will last through the remainder of fiscal 2025, which ends in June.
Consulting chief Derek Danois told employees in a memo that Microsoft’s consulting unit will delay hiring new employees and filling positions to reduce costs. Careful management of costs is critical, Danova writes.
The memo also instructs employees not to pay travel expenses for any internal meetings and instead use remote meetings. In addition, senior executives must authorize visits to customer sites to ensure spending is going to the right customers, Danova wrote.
In addition, the group will cut spending on marketing and non-billable external resources by 35%, the memo said.
The consulting unit is growing slower than Microsoft’s productivity software subscription and Azure cloud computing businesses. The consulting unit generated $1.9 billion in revenue in the September quarter, down about 1% from a year earlier, compared with 33% for Azure.
Under Chief Executive Satya Nadella, Microsoft laid off 10,000 employees and consolidated leases in early 2023 in response to broader shifts in the market and economy. In January 2024, three months after completing its $75.4 billion acquisition of Activision Blizzard, Microsoft cut 1,900 jobs in its gaming division to reduce overlap.
A Microsoft spokesman had no immediate comment.
watch: Microsoft plans to spend $80 billion this year to build artificial intelligence
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