Microsoft temporarily halts new hires in its US consulting division due to cost-saving measures, according to a memo.

• Microsoft is temporarily halting hiring in some areas of its consulting business in the U.S. in an effort to reduce costs, as stated in an internal memo.
• Microsoft announced last week that it would lay off some employees as part of a broader effort to reduce costs, which includes a hiring freeze.
• The memo advises employees not to expense travel for internal meetings and instead use remote sessions.

The company is considering pausing hiring in its consulting business in the U.S. in an effort to reduce expenses, according to an internal memo.

Microsoft announced cuts that will affect less than 1% of its workforce, a week after stating that some employees would be laid off.

Despite Microsoft's earlier announcement of continued investment in its AI initiatives, potential cost cuts in other areas could positively impact the company's stock performance. In 2024, Microsoft's shares experienced a 12% increase, while the Nasdaq Composite index saw a 29% growth.

The consulting division of the U.S. has made changes to align with the policy of the Microsoft Customer and Partner Solutions organization, which has approximately 60,000 employees, according to a page on Microsoft's website. These changes will remain in effect until the end of the 2025 fiscal year in June.

Derek Danois, consulting executive at Microsoft, informed employees in a memo that the consulting division will delay hiring new employees and filling vacant roles to minimize expenses. He emphasized the importance of managing costs carefully.

Danois wrote that employees should not expense travel for internal meetings and instead use remote sessions. Executives must authorize trips to customers' sites to ensure proper use of spending, he added.

The group will reduce its marketing and non-billable external resource expenditure by 35%, according to the memo.

While Microsoft's productivity software subscriptions and Azure cloud computing businesses experienced significant growth, the consulting division's growth was relatively slower. In the September quarter, the consulting unit generated $1.9 billion, which was a 1% decline from the previous year, in contrast to Azure's 33% growth.

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.

A Microsoft spokesperson did not immediately have a comment.

Microsoft intends to invest $80 billion in developing AI technology this year.