Microsoft has initiated its largest job cuts in over two years, laying off approximately 6,000 employees, or nearly 3 percent of its workforce, as part of its strategic shift towards AI and operational restructuring. The layoffs are concentrated in the company’s Redmond, Washington headquarters, affecting software engineering, product management, and managerial roles.
This follows a smaller round of performance-based layoffs in January 2024 and a larger cut in early 2023, when Microsoft laid off 10,000 employees — nearly 5 percent of its workforce — as part of a broader effort to reduce costs and realign priorities amid economic uncertainties.
Despite reporting strong quarterly earnings, Microsoft is streamlining operations, reducing management layers to enhance agility and performance. The cuts impact various divisions, including Xbox and LinkedIn, and reflect broader tech industry trends of scaling back pandemic-era expansions.
Earlier, Microsoft reported revenue of $70.1 billion (up 13 percent), operating income of $32 billion (up 16 percent) and net income of $25.8 billion (up 18 percent) for the quarter ended March 31, 2025.
Microsoft continues to invest in AI, with $80 billion allocated this fiscal year to data centers and infrastructure, though the company emphasizes that the layoffs are not directly AI-driven. The official last working day for affected employees will be in July.
Who will feel the heat?
Microsoft’s recent layoffs will have significant impacts across various business units, including:
Engineering and Product Management: The most substantial cuts were made in software engineering and product management roles, particularly in Redmond, Washington, where 1,985 employees were let go. The focus on reducing managerial layers means that middle management positions are especially vulnerable.
Xbox Division: Gaming has been a critical area for Microsoft, but layoffs here suggest a potential slowdown or restructuring within the Xbox team, possibly impacting game development, product management, and marketing roles.
LinkedIn: Despite being a profitable arm for Microsoft, LinkedIn is also facing cuts, which could affect its sales, marketing, and business development teams. This may impact ongoing projects and product updates.
AI and Data Center Projects: While Microsoft is investing heavily in AI infrastructure, some AI-related projects and data center initiatives are being scaled back. This could lead to delays or reductions in new AI tools or cloud-based services.
Remote Work and Support Roles: The layoffs include both in-person and remote workers, suggesting that support roles across various departments, including customer service and operations, may also be impacted.
InfotechLead.com News Desk
