On Tuesday, Microsoft announced plans to lay off fewer than 3% of its global workforce—roughly 6,000 employees—as part of efforts to reduce expenses while ramping up investment in artificial intelligence.
The job cuts will span across various roles and regions, making it the most significant downsizing since the tech giant eliminated 10,000 positions in 2023. Earlier this year, Microsoft had dismissed a small number of staff for performance-related reasons, but the current round of layoffs is unrelated, according to a report by CNBC.
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As major tech companies aggressively invest in AI as a core driver of future growth, many—including Microsoft and Google—are cutting costs in other areas to maintain profitability. Google has also implemented several rounds of layoffs in recent months for similar reasons, media sources reported.
A Microsoft spokesperson stated, “We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace.”
As of June last year, Microsoft had 228,000 employees. The company routinely adjusts its workforce to align with evolving business priorities and strategic focus areas.
The latest layoffs come shortly after Microsoft reported better-than-expected earnings, with its Azure cloud platform showing strong growth. Despite this financial strength, the rising costs of expanding its AI infrastructure have impacted margins—Microsoft Cloud’s profit margin fell to 69% in the March quarter, compared to 72% a year earlier.
Microsoft has committed $80 billion in capital expenditures for the current fiscal year, primarily directed toward building new data centers to support growing AI demands.
Analyst Gil Luria of D.A. Davidson noted that Microsoft is managing margin pressures carefully, saying the company may need to reduce headcount by at least 10,000 annually to offset the financial impact of increased capital spending.
