Microsoft said that the move will mainly affect "early to mid-career employees."

“As we approach our annual total rewards process, we are making a significant additional investment this year to compensate our employees globally. While we have factored in the impact of inflation and rising cost of living, these changes also recognise our appreciation to our world-class talent who support our mission, culture and customers, and partners," a SpokesVole said.

In addition to contending with cost-of-living increases and a tight Seattle housing market, Microsoft is locked in a fierce battle for talent with companies like Amazon, Google and Facebook owner Meta Platforms, as well as startups.

Microsoft's salary package is composed of base salary, bonus and stock. The changes will apply to a substantial part of the company's workforce, which stood at 181,000 as of June 30, 2021. The company didn't discuss pay figures, so it's hard to tell what the new compensation levels will translate to in dollar figures. But the Glassdoor website estimates that a new graduate working as a software engineer at Microsoft makes about $163,000.