Microsoft began a significant round of layoffs on Tuesday, cutting nearly 3% of its global workforce, which amounts to roughly 6,000 employees. This marks the largest mass job reduction by the tech giant in more than two years.
As of last June, Microsoft had 228,000 full-time employees, with around 55% of them based in the U.S. The layoffs will affect employees at all levels across different regions, with a focus on reducing managerial positions. Notices started being sent to affected workers on Tuesday.
This move comes after Microsoft made a smaller round of performance-based layoffs earlier this year. The 3% cuts are the biggest since early 2023, when the company reduced its workforce by 10,000, or about 5% of its staff, in response to broader tech industry cutbacks following the pandemic.
Interestingly, these layoffs follow a period of strong performance for Microsoft, with the company reporting better-than-expected sales and profits for the January-March quarter. The positive financial results provided a sense of relief during a challenging time for both the tech industry and the broader economy.
Amy Hood, Microsoft’s chief financial officer, explained during an earnings call in April that the company was focused on improving efficiency by creating “high-performing teams” and streamlining its management structure. While the workforce had increased by 2% year-over-year as of March, it had slightly declined compared to the end of 2022.
The layoffs will affect various segments of Microsoft’s business, including LinkedIn and Xbox, though the company has not provided a detailed explanation for the cuts. Instead, Microsoft framed the decision as part of “organizational changes necessary to best position the company for success in a dynamic marketplace.”
In addition to these restructuring efforts, Microsoft has been heavily investing in infrastructure, with $80 billion allocated in the current fiscal year to build data centers and other resources needed for its growing artificial intelligence (AI) projects. Microsoft has touted these AI advancements as transforming the way people work, both within the company and beyond.
CEO Satya Nadella recently discussed AI at an event with Meta CEO Mark Zuckerberg, suggesting that a significant portion of the code for some Microsoft projects might soon be written by AI software itself.
