Microsoft announces another round of layoffs as it plows money into AI

Microsoft plans to further reduce its global workforce, having already trimmed back on employee numbers several times this year.

The company is yet to provide exact details of the number of people affected by the latest round of layoffs, and it has also not revealed which divisions are to be hit. Microsoft has confirmed, however, that the cutbacks represent less than 4 percent of its workforce, leading to estimates of around 9,000 layoffs.

This is the fourth time Microsoft has reduced the number of people it employs – in January, May and June. For there to be so many rounds of layoffs in such a large organization, particularly one faring so well. Microsoft’s quarterly earnings exceeded expectations, with an increase in its net income of 18 percent.

The last known figures (from mid-2024) suggest Microsoft has around 228,00 full-time employees around the world – but multiple rounds of layoffs have reduced this. The measures appear to be part of general streamlining, something already seen at companies like Meta and Amazon.

In a statement to the BBC, Microsoft said:

We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace.

Although details about the departments which are facing cuts have not yet been made public, management positions are likely candidates. As noted by CNBC, there are changes to come in Microsoft’s Gaming division.

In a memo to employees, Phil Spencer, Microsoft’s CEO of Gaming, said:

To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.

AP says that a notice to state officials shows that over 800 workers in Microsoft’s headquarters in Redmond, Washington are facing the chop.

While cutting back in some areas, Microsoft continues to make big investments in artificial intelligence – an area it, like many other firms, sees as crucial. The company has not said that the employee cutbacks are needed to fund AI investment but, having committed to spending $80 billion on AI-training data centers, the financial savings made through this year’s layoffs will be welcomed by Microsoft accountants. 

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