Microsoft to Lay Off 9,000 Employees, Affecting 4% of Workforce

Microsoft announced that it will lay off approximately 9,000 employees worldwide, representing nearly 4% of its global workforce of 228,000 as of June 2024.

This move marks the company’s second significant round of job cuts this year, following the elimination of about 6,000 positions in May, and brings the total number of layoffs since May to over 15,000.

The latest round of cuts will impact a broad range of divisions, including the Xbox gaming unit, sales, and engineering, and will span across various geographies and levels of seniority.

Microsoft confirmed that its gaming division, which includes more than 20,000 staff, has been affected, though the majority of the unit remains intact.

Additionally, the company’s King division, known for developing Candy Crush, is set to cut about 10% of its staff, or roughly 200 jobs, as part of the restructuring.

According to the report, the company stated that the layoffs are part of a broader organizational overhaul aimed at reducing management layers, streamlining products and procedures, and increasing agility.

“We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” a Microsoft spokesperson said.

The company emphasized that these changes are designed to make Microsoft more efficient and responsive to rapidly evolving market demands.

The decision comes as Microsoft intensifies its investments in artificial intelligence (AI) infrastructure, having pledged $80 billion in capital spending for fiscal year 2025, primarily to expand data centers and support AI model training.

While Microsoft continues to report strong profits and maintains a market valuation nearing $3.7 trillion, the soaring costs associated with scaling its AI capabilities have begun to weigh on margins, with projections indicating a decline in cloud profitability for the June quarter compared to last year.

Microsoft’s move mirrors a broader trend among tech giants, many of which have announced layoffs this year as they recalibrate their workforces in response to economic uncertainty and the rising cost of AI development.

Meta, Alphabet, and Amazon have all made significant job cuts in recent months as part of similar restructuring efforts.

Despite the reductions, Microsoft’s leadership remains committed to its AI strategy. The company recently appointed AI pioneer Mustafa Suleyman to head its Microsoft AI division, underscoring its ambition to lead in the next wave of technological transformation.

As the tech sector continues to grapple with the dual pressures of innovation and cost control, Microsoft’s latest layoffs highlight the profound impact AI is having on both business models and employment across the industry.

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