Microsoft Implements Two-Year Ban On Rehiring of Low-Rated Employees, Opts For ‘Good Attrition’

As top IT firms are streamlining their workforce to reorient their strategy, multinational technology corporation, Microsoft, has implemented a two-year rehiring ban on its low-rated employees, according to a Business Insider report.

Apart from putting a stay on the rehiring of certain employees, the IT major is also tracking 'good attrition' a measure which identifies the exit of certain employees as a positive development for the company.

Microsoft is among the top IT companies that are opting for workforce reduction in 2025, followed by a wave of widespread layoffs last year.

Improve or Exit: Microsoft's Clear Message For Struggling Employees

As part of the performance improvement process, Microsoft employees have been directed to choose between two options, either accept a performance improvement plan (PIP) with a fixed timeline for improvement or voluntarily leave with separation package. According to Business Insider the separation package is equivalent to sixteen weeks of pay. The company hasn't issued any official information on the same. An email query by Goodreturns to Microsoft remained unanswered before press time.

Tech Layoffs In 2025

Years after witnessing a massive boom during the COVID era, the technology sector has undergone workforce reductions over the past few years. In 2024, multiple tech companies, including Microsoft, Meta, Google, etc. There has been an eminent consolidation of the workforce and companies' strategy after the advent of artificial intelligence (AI).

So far in 2025, nearly 283 employee layoffs have been executed by major tech companies that have impacted more than 52899 people, according to data available on Trueup. Last year, there were more than 1,110 layoffs executed by tech firms. These tech layoffs had impacted approximately 2,38,461 people, equating to 653 people per day.

The job cuts reflected a strategic realignment aimed at optimising resource allocation and enhancing profitability in high-growth segments. Since 2025, companies like Meta, Microsoft, Ola Electric, Amazon, Wayfare, HP, SalesForce, etc had executed layoffs.

Microsoft's Heavy Bets on AI

Tech layoffs and policy tightening for employees by Microsoft have come against the backdrop of its significant focus on incorporating artificial intelligence in its business operations.

Microsoft in its quarterly earnings reported in April, had highlighted its heavy bets on AI which extend to deals with companies beyond OpenAI. Consequentially, Microsoft and its investors are reliant on the technology's success and widespread adoption. The company has also claimed that its investments in AI are align with the present requirements of the industry for a robust future of American industry.

"Not since the invention of electricity has the United States had the opportunity it has today to harness new technology to invigorate the nation's economy," Microsoft's president, Brad Smith, claimed in a January blogpost, reported The Guardian.

Microsoft had reported an upbeat company earnings in April where its revenue increased to $70.07bn and earnings of $3.46 per share. Its operating profit was up 19% in constant currency terms to $32.0 billion.

"Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth," said Satya Nadella, chairman and chief executive officer of Microsoft. "From AI infra and platforms to apps, we are innovating across the stack to deliver for our customers," he said in April during company results announcement.