Many of the 20,000 European workers questioned said a steady stream of emails, messages and notifications kept them from concentrating.
Others said the way their employer deployed technology also stopped them being more productive.
One expert said many staff suffered high levels of technostress.
The report, which sampled views in 21 European nations including the UK, found that only 11.4% of European workers said they felt highly productive.
“Modern workers have an abundance of technology at their fingertips,” said the report. “But this availability doesn’t necessarily translate into impact.”
Endless amounts of updates and notifications arriving via social media made people less productive, said the report, as did other factors connected to technology.
Microsoft pointed to the dangers of “constant connectivity” which brought with it the expectation that staff would respond at all hours to messages and other requests.
These “flexible working” regimes many firms adopted often came with the assumption that people who worked longer hours would would be more productive.
The software firm’s findings suggest that a company’s “digital culture” could improve workers’ productivity and help them feel more involved.