Microsoft Slashes 3% of Global Workforce in Restructure \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Microsoft has announced its largest layoffs in over two years, cutting nearly 6,000 jobs—roughly 3% of its workforce. The cuts affect all divisions, including LinkedIn and Xbox, with nearly 2,000 layoffs in Washington alone. The move follows strong quarterly earnings and rising AI investment.
Quick Looks
- Microsoft laying off nearly 6,000 employees globally, or 3% of workforce.
- Largest layoff since 2023, when 10,000 jobs were cut.
- Nearly 2,000 workers in Washington are impacted.
- Reductions target management layers across all business units.
- LinkedIn and Xbox divisions among those affected.
- Move follows strong quarterly earnings and rising AI investment.
- Microsoft is spending $80 billion on AI infrastructure this fiscal year.
- Layoffs aim to “increase agility” amid evolving tech landscape.
Deep Look
In its most significant workforce reduction in over two years, Microsoft began laying off nearly 6,000 employees on Tuesday, amounting to roughly 3% of its global workforce. The cuts affect roles across departments and geographies, with an emphasis on reducing layers of management to increase efficiency and agility in a rapidly changing tech landscape.
The company notified nearly 1,985 employees in Washington state alone, according to a WARN notice filed with the state’s employment agency. Microsoft, headquartered in Redmond, Washington, employs about 228,000 people worldwide, as of its last annual headcount report in June 2023. Roughly 55% of those workers are based in the United States.
Though Microsoft did not give a department-by-department breakdown, the cuts are expected to hit major business areas, including LinkedIn, the professional networking platform it acquired in 2016, and Xbox, its flagship gaming division.
The company stated the layoffs were part of “organizational changes necessary to best position the company for success in a dynamic marketplace.”
Strategic Restructuring Despite Strong Earnings
The layoffs come just weeks after Microsoft delivered better-than-expected earnings for the January–March quarter, beating Wall Street estimates in both revenue and profit. The announcement was seen as a stabilizing force in an otherwise volatile tech sector, with investors optimistic about Microsoft’s position in cloud computing and AI.
Yet despite the financial performance, Chief Financial Officer Amy Hood emphasized the need to streamline internal operations. During Microsoft’s April earnings call, she said the company was “building high-performing teams and increasing our agility by reducing layers with fewer managers.”
Hood also noted that Microsoft’s headcount in March was 2% higher year-over-year, though it had declined slightly since December, signaling a longer-term shift toward leaner organizational structures.
Microsoft’s Ongoing AI Investments and Cost Rebalancing
Behind the layoffs is Microsoft’s deepening commitment to artificial intelligence, a field the company has heavily invested in through partnerships (such as with OpenAI) and internal integration across services like Azure, Office 365, and GitHub.
According to the company, it is set to spend $80 billion this fiscal year on building data centers and other infrastructure essential for AI operations. These investments are reshaping how Microsoft allocates resources — prioritizing AI-driven development while trimming traditional managerial and support roles.
At a recent AI-focused event at Meta’s headquarters, CEO Satya Nadella revealed that “20 to 30% of the code” in some internal software projects is now being written by AI tools. Nadella positioned these changes as part of a broader shift that will redefine work itself, including inside Microsoft.
Layoffs Reflect Industry-Wide Realignments
Microsoft’s latest cuts mirror broader trends in the tech industry. After a pandemic-fueled hiring spree, many tech giants — including Amazon, Meta, and Google — have pivoted toward cost-cutting and workforce reduction strategies. The goal: improve operational efficiency while reinvesting in emerging technologies like machine learning, cloud services, and generative AI.
Back in early 2023, Microsoft cut 10,000 jobs, or nearly 5% of its workforce, marking the start of a sweeping realignment across the tech sector. January 2025 saw another, smaller round of performance-based layoffs, which now appear to have been a precursor to this broader restructuring effort.
What makes this round different is Microsoft’s clear emphasis on flattening hierarchy and reallocating resources toward long-term innovation. While some layoffs will affect product teams, the focus appears to be on management — with a goal to build more nimble, AI-augmented teams.
Employee and Market Reaction
Internally, employees have expressed concern over the rapid shifts in staffing and the increased pressure to adapt to AI-driven workflows. While severance packages and support programs are being provided, the psychological toll of another round of layoffs is evident, especially among employees in non-technical roles.
Market analysts, however, are viewing the move as fiscally strategic. Cutting bloated layers of management while doubling down on AI investments is consistent with what investors are demanding: leaner, faster, and more forward-looking companies.
With tech volatility expected to persist through 2025, Microsoft’s restructuring could serve as a template for other firms balancing cost containment with future-ready infrastructure.
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