In a surprising move, Microsoft lets go of employees across departments. Performance metrics take center stage!
Microsoft has announced its decision to lay off a small percentage of its workforce. And the reason is solely based on performance evaluations. These cuts are projected to impact not more than 1% of the company’s global workforce, which totaled 228,000 employees as of June 2024. Addressing the decision, a spokesperson from Microsoft stated,
“At Microsoft, we focus on high-performance talent! When people are not performing, we take the appropriate action.”
However, this move is not unprecedented as it follows many large-scale downsizing efforts by the tech giant in recent years. Early in 2023, Microsoft laid off nearly 10,000 employees as part of a major restructuring initiative.
Additionally, last year in January, the company cut approximately 1900 jobs in its gaming division, and another 1500 roles were eliminated within Microsoft’s Azure cloud computing business later that year.
Despite these layoffs, Microsoft thrives to remain financially strong, boasting a net income margin close to 38%. But it's not all good for the company. The stock performance has been marginally competitive, rising only 12% in the past year compared to the Nasdaq’s impressive 29% gain. This dip has raised questions about how the workforce reductions might align with the company’s broader strategic goals.
Towards Growth and Innovation
Though trimming its workforce down, Microsoft continues to invest heavily in key growth areas like artificial intelligence and cloud computing. These investments are in line with broader industry trends focusing on efficiency and technological advancement.
The layoffs highlight the challenges of sustaining profitability and innovation in a competitive industry, even for a tech leader like Microsoft. The company’s decision to implement performance-based layoffs signals a strong focus on the productivity and efficiency of employees.
