Microsoft To Cut Costs, Pause Hiring In US Consulting, Tighten Spending

Author: Anusuya Lahiri | January 15, 2025 10:39am

Microsoft Corp (NASDAQ:MSFT) could pause hiring in part of its consulting business in the US, CNBC cites from an internal memo. 

The company expects the cuts to affect less than 1% of its workforce.

Rival tech companies — Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Amazon.Com Inc (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:META) — have slashed workforces, citing cost cuts to tackle the pandemic-induced slowdown, efficiency drive, artificial intelligence expansion drive, and more.

The memo also urged employees to swap travel for internal meetings and remote sessions. Additionally, executives must authorize trips to customers’ sites to justify the spending. The group looks to slash its marketing and nonbillable external resource spending by 35%.

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The consulting division’s growth lagged behind Microsoft’s productivity software subscriptions and Azure cloud computing businesses.

Reportedly, in fiscal 2025, Microsoft committed $80 billion to its AI ambitions including developing data centers to train AI models. Also, this week, the company launched the CoreAI division to streamline AI tools and build AI apps.

The Redmond, Washington-based company laid off 10,000 employees in early 2023, implying 4%-5% of its workforce. In January 2024, after completing the Activision Blizzard acquisition, Microsoft’s gaming unit cut 1,900 jobs.

In 2023, Google slashed 12,000 jobs, affecting ~6% of its workforce. Since November 2022, Meta has claimed to have laid off 21,000 employees, implying 25% of its workforce. 

Amazon cut 27,000 roles in 2023. The sector let go of 141,516 employees in the first half of 2023 compared with about 6,000 a year ago, according to Challenger, Gray & Christmas.

Microsoft stock gained close to 7% in the last 12 months. Investors can gain exposure to the stock through Vanguard Information Tech ETF (NYSE:VGT) and SPDR Select Sector Fund – Technology (NYSE:XLK).

Price Action: Microsoft stock is up 0.04% at $415.84 premarket at last check Wednesday.

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