Microsoft continues to tighten its purse strings, after CEO Satya Nadella delivered some more bad news to Redmond’s workforce on Wednesday.

Microsoft staff are already dealing with the loss of 10,000 jobs or five percent of its workforce earlier this year, but CNBC reported that Nadella said this week that the firm will be freezing salary increases for full-time employees in 2023.

Last month Microsoft had posted a 9 percent increase in profit to $18.3 billion during its third quarter, but Nadella justified the pay freeze for 2023, citing economic conditions and an investment in artificial intelligence.

Salary freeze

According to CNBC, Nadella broke the news in an email to Microsoft staff on Wednesday.

The pay freeze for 2023 comes after Microsoft had in 2022 nearly doubled the budget for merit increases and boosted stock allocations for certain employees.

“We will maintain our bonus and stock award budget again this year, however, we will not overfund to the extent we did last year, bringing it closer to our historical averages,” Nadella reportedly wrote in the email.

Microsoft reportedly did not immediately respond to a request for comment.

Executive pay, AI focus

But it is not just the workforce that will shoulder some of the fiscal pain, after Nadella reportedly added that performance bonuses for Microsoft’s top executives will be down considerably from last year.

In 2019 Nadella took home $43 million in total after a 65 percent pay rise. In fiscal 2022 Nadella took home a total of $54.9 million.

In addition to his comments on pay, CNBC reported that Nadella also highlighted Microsoft’s effort to capitalise on a growing artificial intelligence market.

“We are clear that we are helping drive a major platform shift in this new era of Al, and doing so in a dynamic, competitive environment while also facing global macroeconomic uncertainties,” Nadella wrote.

In January, Microsoft announced a multibillion-dollar investment in OpenAI, which relies on Microsoft’s Azure cloud to run its ChatGPT chatbot.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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