During a recent event in Jakarta, Indonesia, on April 30, 2024, Microsoft’s Executive Chair and CEO, Satya Nadella, addressed the audience during the “Microsoft Build: AI Day.” The event was well-covered, including a report by Ajeng Dinar Ulfiana for Reuters.
Microsoft has decided to temporarily halt hiring in parts of its consulting sector in the U.S., as outlined in an internal memo. This move is part of the company’s broader strategy to manage expenses more efficiently. Just a week prior, Microsoft announced workforce reductions affecting less than 1% of their employees, according to a source familiar with the matter.
Despite these cuts, Microsoft remains committed to investing in its artificial intelligence initiatives. This focus on AI is expected to positively impact Microsoft’s stock value. To date in 2024, Microsoft shares have climbed 12%, while the Nasdaq Composite Index has surged by 29%.
The adjustments within the U.S. consulting division are intended to align with the Microsoft Customer and Partner Solutions organization’s policies, which encompasses around 60,000 employees, as detailed on Microsoft’s website. These measures will be in effect for the rest of the fiscal year, which concludes in June 2025.
Derek Danois, a consulting executive, communicated in the memo that the division would pause hiring new employees and filling existing roles to trim costs. Danois emphasized the importance of prudent cost management. The memo also advised employees against expensing travel for internal meetings, encouraging remote sessions instead. Moreover, any travel to client sites must receive executive approval to guarantee that expenditures are justified, according to Danois.
Additionally, the division plans to slash its marketing and non-billable expenses by 35%, as stated in the memo.
While the consulting division has expanded at a slower pace compared to Microsoft’s productivity software and Azure cloud services, it still generated $1.9 billion in the September quarter, reflecting a slight decrease from the previous year. In contrast, Azure’s revenue climbed by 33%.
Under Satya Nadella’s leadership, a significant workforce reduction occurred earlier in 2023, with 10,000 employees laid off as Microsoft addressed broader market and economic shifts. Following the $75.4 billion acquisition of Activision Blizzard, Microsoft’s gaming division cut 1,900 jobs to eliminate redundancies in January 2024.
A Microsoft spokesperson was unavailable for immediate comment.
Moreover, Microsoft is planning an $80 billion investment aimed at expanding its AI capabilities this year.
