Microsoft announces new job cuts across divisions following perfomance-based layoffs

In brief: Microsoft is implementing new job cuts across its business, impacting employees across gaming, experience & devices, sales, and security divisions. The news arrives just a week after Microsoft said it was making performance-related cuts, which are unrelated to the latest layoffs.

A Microsoft spokesperson said that the layoffs would affect a small number of employees without specifying exact numbers, reports Business Insider, which cites two people familiar with the matter.

Employees started receiving notifications on Tuesday about layoffs in Microsoft’s security unit. The Redmond giant was criticized by the US government last year for security lapses in what it called the “preventable” Exchange Online email service hack by a China-linked group.

In May 2024, the company launched its “Secure Future” initiative, telling employees that security had become a “top priority” that trumped everything else when it comes to importance. Microsoft even started tying security performance directly to employee reviews and compensation.

Microsoft’s cuts to its gaming division come almost exactly a year after the company laid off around 1,900 people from this segment, primarily affecting Activision Blizzard employees who arrived following Redmond’s $68.7 billion acquisition of the gaming giant. Some workers from Xbox and ZeniMax were also impacted.

It was reported yesterday that CEO Satya Nadella could have shut down the Xbox division in 2021. Instead, he decided to acquire ZeniMax Media and Activision Blizzard.

Last week, Microsoft confirmed that it would be making performance-based job cuts. A spokesperson said that “when people are not performing, we take the appropriate action.” Companies tend to replace workers who are let go due to performance reasons, so Microsoft’s overall headcount shouldn’t be affected. The firm said the latest layoffs are not related to these cuts.

It’s not just Nadella who is looking to replace poor performers. Meta CEO Mark Zuckerberg this week announced that 5%, or around 3,625 employees, of its low performers were being moved out. Zuckerberg said Meta typically manages out people who aren’t meeting expectations over the course of a year, but the process will be expedited. Those being released will be replaced by new hires throughout 2025.

Microsoft has laid off approximately 12,550 employees since the start of 2020. During the same period, Nadella’s compensation has risen 78%, from $44.3 million in fiscal year 2020 to $79.1 million in fiscal year 2024.

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