Microsoft has instructed managers in several key divisions, including its cloud business and North American sales teams, to pause hiring new employees who do not yet have offers, according to a report by The Information on Thursday. The directive, shared by executives in recent weeks, reflects the company’s efforts to manage costs and improve profit margins.

The freeze is not company-wide, with some areas, notably the team developing Microsoft’s Copilot AI tool, continuing to recruit, the report noted. The tech giant has not immediately responded to a request for comment from Reuters.

The move comes as Microsoft approaches the end of its fiscal year in June and follows a broader trend among major technology companies to rein in spending amid heavy investments in artificial intelligence infrastructure. The company, which had roughly 228,000 employees worldwide as of June 2025, has faced mounting pressure to deliver returns on its AI initiatives. Slower growth in its cloud computing segment during the October–December quarter, coupled with record capital spending on AI, has raised concerns among investors.

Microsoft last implemented large-scale layoffs in July 2025, reducing its workforce by about 4%. The current hiring pause is seen as a less disruptive measure than layoffs but signals continued caution in workforce expansion.

The company’s decision mirrors similar moves across the tech sector. Meta, the parent company of Facebook, is reported to be planning major layoffs that could affect 20% or more of its staff, while Amazon has eliminated roughly 30,000 corporate positions over the past six months, citing efficiency gains from AI and corrections to pandemic-era over-hiring.