On Wednesday, Microsoft confirmed it is laying off thousands of employees, marking the third round of job cuts in recent months.
A company spokesperson has confirmed that the upcoming staff reduction will impact fewer than 4% of the total workforce, translating to approximately 9,000 employees. The announcement signifies the tech giant’s most significant workforce reduction since it laid off 10,000 employees in 2023, occurring alongside similar cuts across the technology sector.
Following the announcement, Microsoft’s stock remained steady, showing no change.
In a recent statement, a Microsoft spokesperson emphasised the company’s ongoing efforts to implement organisational changes aimed at enhancing its positioning and team success within a rapidly evolving marketplace. The spokesperson noted that these changes include a reduction in managerial layers and the introduction of new technologies designed to boost employee productivity.
The recent staff reduction aligns with a broader trend among tech companies, such as Microsoft, which are increasingly leveraging artificial intelligence to enhance workforce efficiency. In a statement made earlier this year, Microsoft CEO Satya Nadella revealed that between 20% and 30% of the company’s code is now being produced by artificial intelligence. He also noted that the tech giant is investing billions into AI infrastructure development.
The extent to which AI played a role in the layoffs announced on Wednesday remains uncertain, as does the specific impact on various divisions within Microsoft. According to a report from The Verge, Phil Spencer, the head of Xbox, communicated internally that his team would face impacts from upcoming changes. According to earlier reports from Bloomberg, the forthcoming layoffs scheduled for July are set to focus on the sales and Xbox teams.
On Wednesday, Microsoft announced further layoffs, following a significant reduction of approximately 7,000 employees, or 3% of its workforce, that took place in May.
In July 2024, Microsoft last disclosed its total workforce, revealing that the tech giant had 228,000 employees on its payroll.
This year has seen other technology firms, such as Meta and Bumble, also implementing layoffs. In a recent communication to his employees, Amazon CEO Andy Jassy cautioned that advancements in artificial intelligence could lead to a decrease in the workforce over time.
In April, Microsoft announced a notable 18% rise in its quarterly profits, reaching $25.8 billion for the three months ending March 31, driven by robust growth in its cloud operations and AI services. Later this month, the company is expected to announce its earnings for the fiscal fourth quarter.