A Microsoft spokesperson said the company will cut staff in many departments based on performance reviews: “When people are not performing, we will take appropriate action.”
Microsoft also affirmed that the company will focus on high-performing talent. “We always try to help people learn and grow. When people are not performing, we will take appropriate action.”
The layoffs affect less than 1% of Microsoft's workforce, marking a tougher stance than its rivals when it comes to underperforming employees. Over the past few months, the company's managers have also spent time evaluating their employees.
Microsoft employed 228,000 people at the end of June 2024. Although its net income margin of 38% was nearly the highest since the early 2000s, its stock has not risen as much as other tech companies.
Compared to previous layoffs, the cuts in early 2025 seem much “softer.” Previously, in early 2023, Microsoft laid off 10,000 people.
The year 2025 also saw the relationship between Microsoft and OpenAI become more tenuous. In the summer of 2024, the company also listed OpenAI as a competitor. Microsoft CEO Satya Nadella used the phrase “collaborative tension” when discussing the relationship with the developer ChatGPT.
Meanwhile, the Microsoft 365 assistant Copilot, which is based on OpenAI technology, is not yet popular in the enterprise world. However, the Windows maker still has other growth opportunities.
