Microsoft plans to suspend hiring in part of its consulting business in the U.S., according to an internal memo, as the company continues finding methods to reel down spending.
TakeAway Points:
- Microsoft intends to hold off on recruiting in a portion of its consulting business in the United States as it looks for methods to reduce costs.
- The hiring ban is a component of the company’s larger cost-cutting initiative. Microsoft announced last week that it was going to lay off some workers.
- Additionally, the email advises staff to use online sessions rather than pay for travel to internal meetings.
- President Biden issued a new executive order to speed the construction of artificial intelligence data centers and bolster national security.
Microsoft stops hiring process
The announced cuts come a week after Microsoft said it would lay off some employees. Those cuts will affect less than 1% of the company’s workforce, according to one person familiar with Microsoft’s plans.
Although Microsoft indicated earlier this month that it plans to continue investing in its artificial intelligence efforts, cost cuts elsewhere could lead to gains for the company’s stock price. Microsoft shares increased 12% in 2024, compared with a 29% boost for the Nasdaq Composite index.
The changes by the U.S. consulting division are meant to align with a policy by the Microsoft Customer and Partner Solutions organization, which has about 60,000 employees, according to a page on Microsoft’s website. The changes are in place through the remainder of the 2025 fiscal year, ending in June.
To reduce costs, Microsoft’s consulting division will hold off on hiring new employees and backfilling roles, consulting executive Derek Danois told employees in the memo. Careful management of costs is of utmost importance, Danois wrote.
Memo instructions
The memo also instructs employees to not expense travel for any internal meetings and use remote sessions instead. Additionally, executives will have to authorize trips to customers’ sites to ensure spending is being used on the right customers, Danois wrote.
Additionally, the group will cut its marketing and nonbillable external resource spend by 35%, the memo says.
The consulting division has grown more slowly than Microsoft’s productivity software subscriptions and Azure cloud computing businesses. The consulting unit generated $1.9 billion in the September quarter, down about 1% from one year earlier, compared with 33% for Azure.
Under the leadership of CEO Satya Nadella, Microsoft in early 2023 laid off 10,000 employees and consolidated leases as the company contended with a broader shift in the market and economy. In January 2024, three months after completing the $75.4 billion Activision Blizzard acquisition, Microsoft’s gaming unit shed 1,900 jobs to reduce overlap.
Biden opens federal land for AI data centers
President Joe Biden issued an executive order Thursday aimed at speeding domestic construction of artificial intelligence infrastructure and shoring up the national security risk involved in the technology.
The move empowers the U.S. Department of Defense and Department of Energy to lease federal sites for gigawatt-scale AI data centers.
“AI is poised to have large effects across our economy, including in health care, transportation, education, and beyond, and it is too important to be offshored,” the White House said in a release.
The order also issued guidelines for AI developers using the sites to not only build, operate and maintain the leased centers at full cost, but also to deliver clean energy resources to match their capacity needs to prevent increases in electricity costs.
Companies leasing the federal lands will also be required to purchase an “appropriate share” of U.S.-manufactured semiconductors and to pay workers “prevailing wages”, according to the release. After the agencies select the sites, developers can submit lease proposals.
Global electricity consumption from data centers, AI and the cryptocurrency sector is expected to double between 2022 and 2026, according to a report from the International Energy Agency.
AI models, especially large language models like OpenAI’s ChatGPT, rely on data centers to train on vast amounts of data and generate more sophisticated, human-like answers to user prompts. To cool the power-intensive structures, AI developers have had to increase water consumption, which critics have pointed out as harmful to the environment and unsustainable in the long run.
Tech firms have responded by exploring other forms of power to maintain their data centers. In recent months, Google, Microsoft and Amazon have each announced nuclear power deals, with Microsoft signing a deal with Constellation to bring the Three Mile Island reactor back online.
