Microsoft is skipping pay increases for full-time employees this year

Microsoft will wait to offer pay increases to full-time employees, CEO Satya Nadella told staff via email on Wednesday.

The move is in line with Microsoft’s efforts to cut costs as revenue growth slows and customers clamp down on spending. In January, the software maker said it would cut 10,000 jobsor just under 5% of the workforce. Alphabet, Amazon, Meta and other tech companies have also declined in recent months.

Last year, as inflation coursed through the economy, Microsoft almost doubled the budget for merit increases and increased stock allocations for certain employees. This year, the compensation will look more normal.

“We will maintain our bonus and stock dividend budget this year as well, but we will not overfund to the extent we did last year, bringing it closer to our historical averages,” Nadella wrote in the email. Microsoft did not immediately respond to a request for comment. Insider reported on the message earlier.

Nadella said performance bonuses for Microsoft’s top executives will be significantly reduced from last year.

In April, Microsoft CFO Amy Hood said that revenue growth in the current quarter would slow to 6.7% from 7.1% in the first three months of the year. The company also called for operating expenses to grow by less than 2%, compared with 7.4% growth in the first quarter.

In addition to his comments about pay, Nadella highlighted Microsoft’s effort to capitalize on a growing market for artificial intelligence.

“We are clear that we are helping to drive a major platform shift in this new era of Al, and are doing so in a dynamic, competitive environment while facing global macroeconomic uncertainties,” Nadella wrote.

In January, Microsoft notified a multi-billion dollar investment in startup OpenAI, which relies on Microsoft’s Azure the cloud to run its viral ChatGPT chatbot and provide major language models like GPT-4 to power apps from Microsoft and a host of other companies.

Hood said last month that Microsoft’s spending would increase quarter-on-quarter due to investments in Azure AI infrastructure.

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