Microsoft executive tells employees in Windows and Office groups to be more careful when hiring

Satya Nadella, CEO of Microsoft Corp., attends a panel discussion at the World Economic Forum in Davos, Switzerland, May 24, 2022.

Hollie Adams | Bloomberg | Getty Images

Microsoft is preparing to pursue a more conservative approach to hiring in a part of the business that includes some of its most popular products.

Rajesh Jha, the executive vice president in charge of Office and part of Windows, told staff members in his group on Thursday to be more careful when it comes to opening up new roles and ask permission first from Jha’s management team, according to a person familiar with the matter, who was not authorized to talk about private deliberations. Bloomberg reported on the change earlier.

The move comes a month before Microsoft begins its new fiscal year, a time when the company regularly reorganizes. More broadly, Microsoft and other companies in the tech industry are recalibrating as a disastrous first half for the market nears its close and inflationary pressures continue to mount.

Facebook parent company Meta, chipmaker Nvidia and social media company Snap have in recent weeks announced plans to hire less vigorously as the Covid-19 pandemic and war in Ukraine have added pressure to the workforce. rise in prices and clouded the outlook for the rest of the year.

When asked about the memo, a Microsoft representative sent the following statement:

“As Microsoft prepares for the new fiscal year, it is ensuring that the right resources are aligned with the right opportunity. destination of these resources.

Microsoft is still focused on retaining top talent in a tight job market. CEO Satya Nadella announced two weeks ago that the company was increasing the amount of money available for employee merit raises.

While Microsoft shares have been hammered this year along with the rest of the market, they have held up better than companies like Google, Facebook and Amazon, which are more exposed to consumer activity and spending.

However, businesses that rely on corporate spending still face risks as customers tighten their budgets. According to RBC Capital Markets estimates, nearly 88% of Microsoft Office’s approximately $11 billion in quarterly revenue is commercial in nature. Office and Windows continue to grow, but not as fast as Microsoft’s Azure public cloud business, which is second only to Amazon Web Services in cloud infrastructure.

Office and Windows are expected to continue growing in the current quarter, albeit at a slightly slower pace, Microsoft chief financial officer Amy Hood told analysts last month.

Revenue from Windows license sales to device makers is expected to be in the low-to-mid range in the second quarter, thanks to a PC market dominated by sales of commercial machines, Hood said. That would be down from 11% growth in the previous quarter.

“We expect Office 365 revenue growth to be a point or two lower sequentially on a constant currency basis,” Hood said.

Microsoft still has room to sell Office improvements to customers, in part because the Teams chat app has brought in new users during the pandemic, and Microsoft has security features some of them might want add. Speaking at a conference call this week with JPMorgan Securities analyst Mark Murphy, Jha said the company is still in its early stages of signing up customers for the more expensive E5 Office subscription tier.

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