Microsoft Corp. has decided to cut raises for full-time staff this year, citing economic conditions and an investment in artificial intelligence.Embed from Getty Images
CEO Satya Nadella informed employees about the change in an email on Wednesday, after giving raises to some employees in 2022 to meet inflation.
“Last year, we made a significant investment in compensation driven by market conditions and company performance, nearly doubling our global merit budget…this year the economic conditions are very different across many dimensions,” the email said, according to Insider.
Nadella also said performance bonuses for Microsoft’s top executives will be down considerably from last year.
The move comes as Microsoft faces slowing revenue growth and rising competition in the cloud and AI markets. In January, the company announced a multibillion-dollar investment in startup OpenAI, which relies on Microsoft’s Azure cloud to run its viral ChatGPT chatbot and provide large language models such as GPT-4 to power apps from Microsoft and other companies.
“We are clear that we are helping drive a major platform shift in this new era of AI, and doing so in a dynamic, competitive environment while also facing global macroeconomic uncertainties,” Nadella wrote.Embed from Getty Images
Some employees expressed disappointment with the decision to skip salary hikes. Isabella Moreira, a senior software engineer at Microsoft, tweeted that it felt like a “slap in the face.”
“Microsoft is one of the richest companies in the world. They can afford to pay their employees fairly,” she wrote.
Microsoft is not the only tech giant that has reduced compensation this year. Amazon.com Inc. also announced that it would cut stock awards for some employees, as it faces higher costs and lower profits.
- ‘Slap in the face:’ Employees disappointed after Microsoft skips salary hikes this year—Fortune India 5/11/2023
- Microsoft skips pay hikes this year amid sharp focus on AI —Yahoo Finance —5/10/2023
- Microsoft’s CEO Says No Raises for Full-Time Employees This Year—Gizmodo—5/10/2023