Microsoft to Cut 9,000 Jobs in Major Workforce Restructuring Amid AI Push

Microsoft is moving forward with one of its largest workforce reductions in recent years, confirming plans to lay off approximately 9,000 employees—just under 4% of its global staff. This marks the company’s most significant headcount reduction since 2023, when it cut around 10,000 jobs.

The cuts come amid broader restructuring in the tech industry, where companies are increasingly embracing artificial intelligence to automate tasks and streamline operations. Microsoft, which had 228,000 employees as of July 2024, is focusing on “organizational changes necessary to best position the company and teams for success,” according to a company spokesperson.

Strategic Realignment and AI Integration

While Microsoft hasn’t confirmed which departments will be most impacted, internal memos and media reports suggest that teams within Xbox and sales may see notable cuts. Xbox chief Phil Spencer reportedly told staff the gaming division would be affected, and Bloomberg previously flagged sales as a target area for the July layoffs.

This is the third significant round of job cuts in recent months. In May, Microsoft eliminated roughly 7,000 roles (about 3% of its workforce), as it looks to become leaner and more agile in a “dynamic marketplace.”

The company emphasized that part of its current strategy includes flattening management layers and leveraging AI to boost productivity. CEO Satya Nadella previously stated that AI tools now generate up to 30% of the company’s code, underscoring the scale of the company’s digital transformation.

Industry-Wide Downsizing

Microsoft’s move comes as several major tech firms have also scaled back headcounts. Meta, Amazon, and Bumble have all implemented staff reductions in 2025. Amazon CEO Andy Jassy recently told employees that AI will eventually lead to a leaner organization, signaling that more job cuts are likely across the sector.

Despite the workforce reductions, Microsoft’s financial performance remains robust. The company reported an 18% jump in profit to $25.8 billion for the quarter ending March 31, driven by growth in cloud computing and AI services. Its Q4 earnings report is expected later this month, and investors will be watching closely to see how the company continues balancing innovation and efficiency.

Looking Ahead

Microsoft is navigating a pivotal moment: accelerating its AI ambitions while adapting to an evolving labor model. The layoffs underscore a broader trend in tech, where operational efficiency and AI integration are reshaping company structures — even among industry leaders with strong balance sheets.

While Microsoft’s stock price held steady following the announcement, the impact on morale and productivity—particularly in high-profile divisions like Xbox—remains to be seen.