Microsoft has paused hiring in some of its biggest divisions, including its cloud business and North American sales teams, according to a report from The Information. Managers were told not to bring in new candidates unless they already had job offers. The move is aimed at cutting costs and improving profit margins.
The freeze is not company-wide. Other groups, such as the team building Microsoft’s Copilot AI tool, are still hiring. The decision comes as Microsoft nears the end of its fiscal year in June, a time when the company often slows hiring. But this year’s pause is more significant because of record spending on artificial intelligence (AI) infrastructure.
Microsoft’s capital spending recently hit $37.5 billion in one quarter, with about two-thirds going to hardware for AI workloads. These heavy investments have lowered cloud profit margins, which are expected to be around 65% next quarter. Investors are watching closely, especially as Azure growth slows and Microsoft leans heavily on OpenAI, which makes up about 45% of Azure’s committed backlog.
The company is also facing other challenges, including a nine per cent dip in gaming revenue and weaker consulting business. Internal communications reportedly suggest that Microsoft is shifting its focus from “scaling for stability” to “scaling for adaptability” as it adjusts to market pressures.
