In an email, a Microsoft spokesperson said the company focuses on high-performing talent. “We work hard to help people learn and grow. When people aren’t performing, we take appropriate action.”

Microsoft Bloomberg
Microsoft carried out a new round of layoffs at the beginning of the year. Photo: Bloomberg

CNBC sources told CNBC that the layoffs affect less than 1% of Microsoft's workforce. According to Business Insider, Microsoft has taken a tougher stance than its competitors when it comes to underperforming employees. Over the past few months, managers have spent time evaluating their employees.

Microsoft employed 228,000 people as of the end of June 2024. Despite its 38% net income margin, which is near its 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 are much “softer.” For example, Microsoft laid off 10,000 people in early 2023. In January 2024, three months after completing its blockbuster acquisition of Activision Blizzard, the company’s gaming division eliminated 1,900 people to avoid overlap.

The year 2025 also comes as Microsoft’s relationship with OpenAI becomes more tenuous. Last summer, the company listed OpenAI as a competitor. CEO Satya Nadella used the phrase “collaborative tensions” when discussing the relationship with the developer ChatGPT.

Meanwhile, the Microsoft 365 assistant Copilot, which is based on OpenAI technology, has yet to gain traction in the enterprise world. However, the Windows maker still has other growth opportunities, such as from the Azure cloud.

(According to CNBC)