Microsoft has now initiated a new round of job cuts, impacting around 3% of its global workforce. The move will result in more than 6,000 employees across multiple divisions and geographies losing their jobs in what seems to be part of a broader organizational restructuring.
This move by Microsoft adds to a growing pattern of job cuts across the tech sector, where firms are reassessing headcount and organizational design. Meta, Salesforce, and Google have all implemented workforce reductions within the past year, often citing the need to optimize spending and concentrate resources on AI development and infrastructure scaling.
At the end of June 2024, Microsoft employed roughly 228,000 people worldwide. A 3% reduction places the number of affected staff at around 6,800-7,000, making this the company’s most substantial workforce cut since January 2023, when it eliminated 10,000 positions. A Microsoft spokesperson confirmed that the layoffs will span all levels of the organization and are not related to individual performance.
The timing of the layoffs has drawn attention, given Microsoft’s strong financial performance in recent quarters. The company reported $25.8 billion in net income for the March quarter, an 18% increase year-over-year, driven largely by the continued expansion of its Azure cloud services and integration of artificial intelligence tools across its product portfolio. However, alongside these areas of aggressive investment, Microsoft is also taking steps to contain operational costs.
The company is expected to spend approximately $80 billion this fiscal year on cloud infrastructure, particularly data centers that support its AI services. This level of capital expenditure is immense and requires corresponding adjustments elsewhere in the organization. CEO Satya Nadella has previously hinted at internal recalibrations, noting during a January analyst call that Microsoft was reassessing its go-to-market and sales strategies in light of platform shifts.
Apparently, this is it. According to the company, one of the primary objectives of the layoffs is to reduce unnecessary layers of management. This mirrors similar recent moves by other technology giants such as Amazon, which earlier this year cited “unnecessary layers” as a reason for its own staffing reductions. In recent months, the company has already made changes to sales roles and restructured some technical teams.
While Microsoft has not specified which units will be most affected, prior rounds of layoffs suggest that its gaming and hardware operations could again face reductions. In January 2024, the company cut 1,900 jobs across its Xbox, Bethesda, and Activision Blizzard teams, following its acquisition of the latter. Similarly, in 2023, Microsoft laid off employees from its HoloLens augmented reality unit and other engineering teams. These cuts followed broader attempts to refocus its hardware strategy in response to changes in the global market.
