Microsoft is undertaking a focused workforce reduction, planning to eliminate approximately 6,000 jobs—around 3% of its total headcount—across multiple departments and regions. This move aims to simplify management structures and sharpen the company’s focus on high-priority growth areas such as artificial intelligence and cloud computing.
About 2,000 employees at Microsoft’s Redmond, Washington headquarters will be among those impacted, with layoffs expected to begin July 13. The affected workforce also includes personnel at LinkedIn and other divisions. A company spokesperson emphasized that these changes are part of ongoing efforts “to best position the company for success in a dynamic marketplace.”
This reduction follows Microsoft’s historical approach to workforce realignment, which saw a cut of 10,000 employees in January 2023. The current downsizing reflects a strategic pivot to increase managerial spans of control, enhancing efficiency and agility while trimming overlapping roles.
Microsoft’s heavy investment in AI infrastructure underpins the restructuring. The company plans to spend an estimated $80 billion on data centers this fiscal year to support AI-powered services and Azure cloud capabilities. CEO Satya Nadella has previously noted how AI enables labor cost savings by automating tasks traditionally handled by employees.
Finance executive Bill Duff highlighted at a recent JP Morgan conference that AI implementations across Microsoft help reduce human workload in customer support, marketing content creation, and deal compliance analysis—leading to “hundreds of millions of dollars a year” in cost savings.
In parallel, Microsoft is transitioning certain sales functions to third-party firms, especially targeting small and midsize business customers. Technical teams have also undergone restructuring to better align with evolving business goals.
The tech industry at large is witnessing similar workforce adjustments. Meta announced staff reductions earlier this year, aiming to cut roughly 5% of its workforce while Salesforce trimmed over 1,000 jobs to reallocate resources toward AI projects.
Microsoft’s latest moves reflect a broader trend of companies optimizing costs and reshaping talent pools amid growing AI adoption and economic uncertainties.
For more details, read the full Bloomberg report: Microsoft is cutting 3% of employees to reduce management layers.