Microsoft has announced a temporary pause in hiring within its U.S. consulting division as part of an extensive cost-cutting initiative. This strategic move comes as the company aims to reduce expenses and align with policies set forth by the Microsoft Customer and Partner Solutions organization. The decision includes a significant 35% reduction in marketing expenditures and non-billable external resource spending.
The changes will see the consulting division withholding new hires and refraining from filling vacant positions through the end of the 2025 fiscal year, which concludes in June. This adjustment is part of a broader effort to address the slower growth experienced by Microsoft's consulting unit, which generated $1.9 billion in revenue during the September quarter—a slight decline from the previous year. Despite this, the unit's performance lags behind the company's more rapidly expanding productivity software subscriptions and Azure cloud computing services.
The Microsoft Customer and Partner Solutions organization, which comprises approximately 60,000 employees, is central to this alignment strategy. Meanwhile, the company remains committed to investing in artificial intelligence initiatives, indicating a continued focus on technological advancement despite the operational adjustments.
Recent layoffs have also marked Microsoft's cost-cutting measures. Last week, the company laid off an undisclosed number of employees, following a more substantial reduction earlier in January 2024, when 1,900 jobs were cut from its gaming unit to reduce redundancy. Additionally, in early 2023, Microsoft reduced its workforce by 10,000 employees and consolidated office leases, affecting less than 1% of its global workforce.
Despite these challenges, Microsoft's stock has seen a modest 12% increase in 2024. However, this rise pales compared to the 29% boost experienced by the Nasdaq Composite index during the same period.