Microsoft has revealed plans to reduce its global workforce by roughly 3%, equating to about 7,000 employees worldwide. This represents the company’s largest round of job cuts since it eliminated 10,000 positions in 2023, as it aims to streamline its operations amid ongoing economic uncertainty and technological change.
The redundancies will affect staff across all levels, departments, and regions, including key divisions such as LinkedIn, Xbox, GitHub, and Azure. A significant number of these roles will be cut at Microsoft’s headquarters in Redmond, Washington, where nearly 2,000 positions are being removed, with approximately 1,500 of those based in the office. As of June last year, Microsoft employed 228,000 people globally.
Unlike earlier layoffs this year, which were performance-related, the current reductions are not connected to individual employee performance. Instead, Microsoft has described these cuts as part of an organisational restructuring that aims to reduce management layers and improve operational agility.
“We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace,” a company spokesperson said.
Many firms have been trimming their workforces to adapt to shifting market conditions and economic pressures. For example, Amazon cited the removal of “unnecessary layers” in its management structure when announcing its layoffs earlier this year. Similarly, cybersecurity provider CrowdStrike recently reduced its workforce by 5%.
Microsoft CEO Satya Nadella has emphasised the company’s ongoing investment in artificial intelligence (AI), which is helping transform its business priorities. Nadella revealed that approximately 30% of Microsoft’s code is now generated by AI, which highlights the tech giant’s commitment to automation and innovation. The company plans to invest around $80 billion in AI-related initiatives during the current fiscal year.
Despite the workforce reductions, Microsoft continues to demonstrate strong financial performance. The company posted quarterly net income of $25.8 billion, an 18% increase year-on-year, largely driven by robust growth in its cloud and AI segments. Revenue from the intelligent cloud division rose 21%, surpassing analyst expectations.
The layoffs have prompted mixed reactions internally, with some employees expressing surprise and disappointment, describing the cuts as sudden and unevenly distributed across teams. Severance packages reportedly include 12 weeks’ base pay plus additional weeks depending on tenure, with affected staff remaining on payroll for 60 days post-termination and eligible for bonuses.
Chief Financial Officer Amy Hood has stated the company is “increasing our agility by reducing layers with fewer managers,” displaying a move towards leaner management frameworks.
The company’s shares recently reached their highest level this year, indicating investor confidence despite the restructuring. This development fits within a wider pattern of tech industry layoffs in 2025, with over 53,000 technology jobs cut across more than 120 companies so far this year, as firms recalibrate after pandemic-era hiring surges and adjust to evolving consumer and business demands.