Microsoft plans to pause hiring in part of its consulting business in the U.S., according to an internal memo, as the company continues seeking ways to reel in expenses.
The announced cuts come a week after Microsoft said it would lay off some employees. Those cuts will affect less than 1% of the company’s workforce, according to one person familiar with Microsoft’s plans.
Although Microsoft indicated earlier this month that it plans to continue investing in its artificial intelligence efforts, cost cuts elsewhere could lead to gains for the company’s stock price. Microsoft shares increased 12% in 2024, compared with a 29% boost for the Nasdaq Composite index.
The changes by the U.S. consulting division are meant to align with a policy by the Microsoft Customer and Partner Solutions organization, which has about 60,000 employees, according to a page on Microsoft’s website. The changes are in place through the remainder of the 2025 fiscal year ending in June.
To reduce costs, Microsoft’s consulting division will hold off on hiring new employees and back-filling roles, consulting executive Derek Danois told employees in the memo. Careful management of costs is of utmost importance, Danois wrote.
The memo also instructs employees to not expense travel for any internal meetings and use remote sessions instead. Additionally, executives will have to authorize trips to customers’ sites to ensure spending is being used on the right customers, Danois wrote.
Additionally, the group will cut its marketing and non-billable external resource spend by 35%, the memo says.
The consulting division has grown more slowly than Microsoft’s productivity software subscriptions and Azure cloud computing businesses. The consulting unit generated $1.9 billion in the September quarter, down about 1% from one year earlier, compared with 33% for Azure.
Under the leadership of CEO Satya Nadella, Microsoft in early 2023 laid off 10,000 employees and consolidated leases as the company contended with a broader shift in the market and economy. In January 2024, three months after completing the $75.4 billion Activision Blizzard acquisition, Microsoft’s gaming unit shed 1,900 jobs to reduce overlap.
A Microsoft spokesperson did not immediately have a comment.
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