Microsoft is preparing to take a more cautious approach to hire in a division that includes some of its most popular products.

On Thursday, May 26, Rajesh Jha, executive vice president in charge of Office and a portion of Windows, told staffers in his group to be more cautious when it comes to opening up new roles and to first seek permission from Jha’s leadership team.

This comes from an anonymous source familiar with the situation, who requested anonymity because he was not permitted to speak about private discussions.

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The move comes a month before Microsoft starts its new fiscal year, a time when the company regularly reorganizes.

More broadly, Microsoft and other tech businesses are recalibrating as the market’s disastrous first half of the year draws to a close and inflationary pressures continue to rise.

As the Covid-19 outbreak and the crisis in Ukraine have increased to the rising pressure on costs and dampened the outlook for the rest of the year.

Facebook parent Meta, chipmaker Nvidia, and social media firm Snap have announced intentions to employ less aggressively in recent weeks.

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

“As Microsoft gets ready for the new fiscal year, it is making sure the right resources are aligned to the right opportunity. Microsoft will continue to grow headcount in the year ahead and it will add additional focus to where those resources go.”

In a tight labor market, Microsoft is still focused on keeping top people.

Satya Nadella, the company’s CEO, said two weeks ago that the amount of money available for merit hikes for employees will be increased.

While Microsoft’s stock has been battered along with the rest of the market this year, it has fared better than Alphabet, Meta Platforms, and Amazon, which are more dependent on consumer spending and activity.

Companies that rely on business expenditure, on the other hand, are still at danger as clients’ budgets tighten. According to RBC Capital Markets estimates, about 88 percent of Microsoft’s around $11 billion in quarterly Office sales is commercial in nature.

Office and Windows are still growing, but not as fast as Microsoft’s Azure public cloud business, which is second to Amazon Web Services in cloud infrastructure.

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Due to a PC market dominated by commercial machines, revenue from Windows license sales to device makers should be in the low to mid-single digits in the second quarter, according to Hood. This would be a drop from the previous quarter’s 11% rise.

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

Microsoft still has room to sell clients on Office enhancements, in part because the Teams chat app attracted new users during the pandemic, and Microsoft has security features that some of them may want to add. Jha said this week at a conference with Mark Murphy, an analyst at JPMorgan Securities, that the company is still in the early stages of attempting to sign customers up for the more expensive E5 Office subscription tier.

Source: CNBC

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