In AI era, Microsoft holds the purse strings: Salaries frozen but bonuses remain
AI Microsoft
Microsoft announced on Wednesday that it will not provide salary increases for its full-time employees this year.
Microsoft CEO Satya Nadella cited global macroeconomic uncertainties and a major push towards artificial intelligence (AI) to justify his move to freeze employee salaries. However, certain hourly or equivalent roles may receive salary increases, the company said.
"We are clear that we are helping drive a major platform shift in this new era of artificial intelligence, and doing so in a dynamic, competitive environment while also facing global macroeconomic uncertainties," media reports said quoting Nadella's internal email.
It is to be noted that Microsoft was an early adopter of AI technology, integrating Open AI's ChatGPT with its search engine Bing. According to media reports, Microsoft has invested nearly $13 billion in Open AI.
According to Nadella's email, the decision was carefully considered by senior leadership over several months, with a focus on ensuring the long-term success of the company.
Microsoft also announced that it will reduce the budget for annual bonuses and stock awards to 'historical averages'.
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Nevertheless, the email emphasised that Microsoft will remain committed to prioritising and acknowledging exceptional performance by offering substantial rewards. To achieve this, managers will be entrusted with distinguishing and allocating compensation based on individual performance within their assigned budgets, the email read.
This latest announcement comes after Microsoft announced the termination of over 10,000 employees earlier this year. Additionally, LinkedIn, a group firm of Microsoft, recently cut around 716 jobs and announced the closure of its job app in China.
Meanwhile, thedecision has disappointed some employees, who view it as a pay cut.
An India-based Microsoft employee, speaking on the condition of anonymity to BQPrime, expressed concerns about the impact on their annual appraisal cycle and the potential for further layoffs if market conditions do not improve.
Indian news website BQPrime cited a Microsoft India spokesperson as saying that compensation would be aligned with the overall market, even though there won't be a hike in salariesthis year.
"While we will not be providing salary increases for our full-time salaried employees this year, we will continue to invest in our employees through promotions, bonus and stock," the spokesperson told BQPrime.