In an internal email to employees, Microsoft said the company will be skipping salary hikes this year. According to reports, the company will maintain its employee bonus and stock awards to "historical averages." Satya Nadella, CEO, Microsoft, reportedly said while there will be salary hikes for certain hourly or equivalent roles, the company will not increase salaries for full-time employees and that the decision has been taken in line with global macroeconomic trends and the shifting focus of the industry "in the new era of AI."

The development comes months after the Washington-based company announced it would lay off about 10,000 employees or 5% of its workforce by the end of the third quarter of CY23, amidst the looming threat of a global recession.

The decision by the company comes at a time when Microsoft is heavily spending on its AI research and OpenAI-backed ChatGPT. In January, the tech behemoth announced a multi-billion dollar investment with artificial intelligence lab OpenAI to accelerate AI breakthroughs to ensure these benefits are broadly shared with the world. The company said that it will continue to build its Azure’s AI infrastructure.

"Microsoft will deploy OpenAI's models across our consumer and enterprise products and introduce new categories of digital experiences built on OpenAI's technology. This includes Microsoft's Azure OpenAI Service, which empowers developers to build cutting-edge AI applications through direct access to OpenAI models backed by Azure’s trusted, enterprise-grade capabilities and AI-optimized infrastructure and tools," the company had said.

As tech giants invest billions in the research of generative AI, Arvind Krishna, chief executive officer, IBM last week said that the company expects to freeze hiring for job roles that can be easily replaced by artificial intelligence. In an interview with a global news organisation, Krishna said hiring in back-office operations such as human resources and for mundane tasks such as providing employment verification letters would either be suspended or the hiring for such job roles will be frozen. This means that 7,800 job roles will be impacted.

Over the past few months, tech companies have resorted to layoffs, and cost-cutting in order to streamline operations. While LinkedIn has recently laid off 716 employees, Cognizant has trimmed 3,500 jobs. Amazon has laid off 27,000 employees, whereas Meta Platforms Inc has already trimmed 13% or 11,000 jobs of its workforce. Google recently sacked around 12,000 roles in one of the highest headcount reductions in the past year. Microblogging platform Twitter sacked 50% of its workforce. Snap, the parent company of the social media platform Snapchat, sacked 20% of its staff.

Tech giant Microsoft

'Slap in the face:' Employees disappointed after Microsoft skips salary hikes this year