As inflation soars and the cost of living crisis bites, startups and enterprises alike are having to tighten their belts, cut back on costs and dig in. You might think that global technology behemoths would be exempt from these external forces, but not so.

In an email to Microsoft employees, executive VP Rajesh Jha and his leadership team delivered a memo, reported (opens in new tab) by Bloomberg, outlining hiring cuts at several core teams.

According to Jha, the hiring slowdown applies to teams working on Windows, Office, and Teams, despite the strong performance of the company's productivity and collaboration software since the transition to remote and hybrid working.

The company stressed that the hiring limits apply only to those teams, not the whole company, and Microsoft will continue to hire new people. A spokesperson told Bloomberg that Microsoft is eager to make sure it is hiring the right people.

"As Microsoft gets ready for the new fiscal year, it is making sure the right resources are aligned to the right opportunity,” Microsoft added in a statement.

“Microsoft will continue to grow headcount in the year ahead and it will add additional focus to where those resources go."

The new normal

Russia's invasion of Ukraine has kicked off something of a crisis within the global economy, coming off two years of the pandemic new normal.

Technology companies and startups were initially the big winners from the pandemic, providing tools to keep everyone safe, fed and connected, but growth must eventually come to an end.

Companies as big as Meta, Snap, and Salesforce have announced measures to counteract the economic downturn, which has affected ad budgets at other companies and the willingness to spend on services.

Startups are increasingly resorting to layoffs, especially those that hired quickly to accelerate growth during the boom times.

For its part, Microsoft recently announced (opens in new tab) that it will double its budget for salary increases and stock grants in order to retain key employees. However, the latest move will raise questions over its eagerness to continue investing so heavily in properties like Teams and Office.