In one of its largest job cuts in recent years, Microsoft has laid off around 6,000 employees—roughly 3% of its global workforce—as the company refocuses its strategy and doubles down on artificial intelligence investments.
The layoffs began Tuesday, hitting hard in Microsoft’s home state of Washington, where nearly 2,000 roles were slashed, many in software engineering and product management tied to the Redmond headquarters. Overall, the cuts span across teams, seniority levels, and geographies, though a key focus is reducing layers of management.
“This is a day with a lot of tears,” wrote Scott Hanselman, a longtime Microsoft executive and VP of developer community, in a candid LinkedIn post. “These are people with dreams and rent and I love them and I want them to be OK.”
Microsoft didn’t point to any single reason for the layoffs but called them part of “organizational changes necessary to best position the company for success in a dynamic marketplace.”
Strong Profits, But Tough Decisions
The timing of the layoffs may seem surprising to some. Just weeks ago, Microsoft posted strong quarterly earnings, beating Wall Street expectations. But like many tech giants, Microsoft has been shifting gears after an aggressive hiring spree during the post-pandemic boom.
“This isn’t just about cutting costs,” said Daniel Zhao, chief economist at Glassdoor. “Big tech companies are reshaping themselves after growing rapidly during the pandemic. Now they’re optimizing.”
Microsoft had 228,000 full-time employees as of last June, with 55% based in the U.S. While the company announced smaller, performance-based layoffs in January, this is its largest round since early 2023, when it cut 10,000 jobs (5% of its workforce).
AI Push and Restructuring
While Microsoft hasn’t directly linked these layoffs to artificial intelligence, it’s no secret that the company is pouring billions into the technology. CEO Satya Nadella recently said that up to 30% of code for some internal projects is now AI-generated.
Microsoft is spending an estimated $80 billion this fiscal year to build data centers and infrastructure for AI. Still, experts caution that AI isn’t necessarily the reason behind the cuts.
“AI isn’t replacing managers,” Zhao explained. “What we’re seeing is a strategy shift—companies trimming layers and streamlining operations as growth slows.”
Indeed, Microsoft CFO Amy Hood said in April that the company’s headcount was still slightly above where it was a year ago, despite recent belt-tightening. She emphasized a focus on building “high-performing teams” with fewer layers of management.
Layoffs Hit Xbox, LinkedIn, and More
No corner of Microsoft seems untouched. The layoffs have affected business units from Xbox to LinkedIn, with employees and executives alike posting messages of support and grief on social media.
Of the employees laid off in Washington, 1,500 were working on-site, while 475 were remote. Their final day will be in July, per the state’s Worker Adjustment and Retraining Notification (WARN) notice.
A Tech Industry Reset
Microsoft’s decision mirrors a broader trend in tech. After surging during the pandemic, companies are now pulling back and recalibrating for a slower-growth environment.
“Many firms are coming back to Earth,” said Cory Stahle, an economist at job site Indeed. “They’re adjusting not just for today, but for what the next few years might bring.”
That includes everything from consumer spending shifts to global economic uncertainty. Though Microsoft has been less affected by tariffs than some competitors, rising costs across sectors—from groceries to electronics—have implications for all tech businesses.
Bottom Line
Microsoft may be thriving on the balance sheet, but that doesn’t mean it’s immune from the need to evolve. And for many employees, that evolution has come at a painful cost.
“This is the first time I’ve had to lay people off to support business goals that aren’t my own,” Hanselman wrote. “It’s hard. These are good people.”
As the tech giant bets big on AI, it’s also making hard choices—trying to stay lean, stay competitive, and stay ahead. But for thousands of workers, it’s a deeply personal reminder that even in booming times, no job in tech is guaranteed.
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