Get Instant Loan up to ₹10 Lakh!
Microsoft has started its performance-based job cuts which will lead to the affected employees losing their jobs with immediate effect and without any severance pay, according to a report by Business Insider.
A letter sent by Microsoft to the concerned employees (via Business Insider) read, “The reason(s) for the termination of your employment including your job performance has not met minimum performance standards and expectations for your position. You are relieved of all job duties effective immediately and your access to Microsoft systems, accounts, and buildings will be removed effective today. You are not to perform any further work on behalf of Microsoft.”
“You are bound by the terms of your Microsoft Employee Agreement to return such materials and to protect Microsoft confidential information after termination of your employment.” the email added.
The Redmond-based tech giant also reportedly told the employees that if they applied for employment in the future, their past performance and the reasons for their dismissal would be taken into account. Microsoft has also asked them to return their company card key, company card, phone card and any other company property.
The new redundancies are part of the company's increasingly tough stance on performance management, following the lead of its competitors. According to reports, managers at Microsoft have spent the last few months evaluating employees up to level 80, one of the highest levels at the tech giant.
The tech giant has also begun the process of letting people go across various organisations, including security, experiences and devices, sales and gaming, Business Insider reported, citing two sources. However, a spokesperson told the publication that these layoffs were different from the performance-based cuts.
In a statement to Business Insider, explaining its decision, a Microsoft spokesperson said, "At Microsoft we focus on high performance talent… We are always working on helping people learn and grow. When people are not performing, we take the appropriate action."
Despite the job cuts, Microsoft has reportedly indicated that roles vacated through performance-based exits are often replaced by new hires. The report added that the company’s global headcount—estimated at around 228,000 employees as of mid-2024—may remain relatively stable.
Since the appointment of Satya Nadella in 2014, Microsoft has seen multiple rounds of layoffs, beginning with a significant cut that year, which saw 18,000 employees—approximately 14 per cent of the workforce at the time—being let go.
In recent years, strategic job reductions have spanned multiple sectors. In 2023, Microsoft laid off roughly 10,000 employees across divisions, including Xbox.
Shortly after its acquisition of Activision Blizzard for $69 billion, Microsoft had laid off 2,000 employees in its gaming unit in January last year. In June of same year, Microsoft asked 1,000 employees to leave in what it called a "restructuring of Mixed Reality organisation'.
Recently, Google sent out a memo to all of its US employees offering them a 'voluntary exit programme', guaranteeing them severance pay if they leave their current role at the Android maker. Many employees are concerned that the voluntary buyout could be a precursor to layoffs.
Meanwhile, Meta, the parent company of social media giants such as WhatsApp and Instagram, has announced that it will be cutting around 5% of its workforce, which will focus on 'moving low performers out faster'. Meanwhile, Meta CEO Mark Zuckerberg has also told employees that 2025 will be an 'intense year'.
Archer-Daniels-Midland (ADM) and Salesforce, too, have joined the expanding list of industry titans trimming their staff. According to Reuters, ADM, a major international grain trader, announced plans to cut up to 700 jobs to reduce expenses by $500 million to $750 million over the next three to five years. Juan Luciano, the company's CEO, stated that "softer market conditions and policy uncertainty" were the main reasons for these layoffs. The action comes as ADM adapts to a shifting global market environment, with difficulties expected in the upcoming year.
Amid news of recent layoffs, big tech has not wavered in its focus on AI, despite competition from Chinese rivals such as DeepSeek and Alibaba's Qwen. US tech giants such as Microsoft, Meta and OpenAI have pledged to invest billions of dollars in developing AI infrastructure.
Microsoft has pledged to spend $80 billion on AI this year, while Zuckerberg's Meta has pledged to spend $65 billion. Meanwhile, OpenAI has joined forces with SoftBank, Oracle and others in the Stargate project, which has pledged to invest $100 billion in building AI infrastructure in the United States.
Catch all the Technology News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.