Microsoft is cutting 9,000 jobs globally, targeting under 4% of its workforce, as it takes a hard turn toward operational efficiency and artificial intelligence (AI) expansion.
These layoffs are part of its calculated business enhancement, as the company, still profitable and growing, is trading people for processors.
This latest round of cuts, confirmed as the company opened its 2026 fiscal year, comes after months of internal trimming. Over 6,000 roles were removed in May, another 300 in June, and performance-related reductions took place earlier in the year. As of June 2024, Microsoft employed around 228,000 people globally.
The driving force behind these decisions is not falling revenue or poor earnings. In fact, Microsoft posted a massive $25.8 billion in net income for the March quarter, an 18% year-on-year increase, on revenue of $70 billion. It’s the company’s evolving priorities that have prompted the shift.
In a memo to staff, Xbox boss Phil Spencer wrote: “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.”
The layoffs span multiple teams and regions, including 200 roles at King, the Barcelona-based Candy Crush developer, as well as staff at Bethesda and ZeniMax.
Cuts are also expected across sales, engineering, and operations, with focus now placed on leaner structures, faster decisions, and tighter alignment with the company’s long-term tech strategy.
Internally, Microsoft has rolled out formalised performance improvement plans and a strict two-year rehire ban for employees let go for underperformance.
There’s also a new focus on tracking what insiders call “good attrition”, voluntary or involuntary exits viewed as positive for the company’s talent pool. This shows similar systems at Meta and Amazon.
Why all this now? Microsoft is spending big; its $80 billion capital investment plan for fiscal 2025 is the largest in its history. Over half of that budget is being funnelled directly into AI infrastructure: from custom Maia chips to tens of thousands of Nvidia H100 GPUs, to even building a nuclear-powered data centre in Finland.
The goal is to support real-time inference for tools like Microsoft Copilot, which demand immense computing power.
An insider familiar with the cost model said this is a “straight swap: fewer salaries, more silicon.” Internal estimates suggest the job cuts will save around $1.7 billion annually, money that will be redirected to these AI-heavy investments.
Microsoft’s strategy is not unfolding in isolation. The tech industry has entered a phase of cost consolidation.
Big Tech has eliminated over 75,000 jobs in just the first half of 2025. Meta trimmed 5% of its lowest-rated performers, Alphabet has laid off hundreds, and Amazon has reduced headcount in books, devices, HR, and other units.
Microsoft’s share price hit a record high of $497.45 on 26 June 2025, just days before this announcement.
Even with the layoffs, investor confidence remains intact, fuelled by expectations that Azure, Microsoft’s cloud business, and enterprise software subscriptions will deliver 14% year-on-year revenue growth in the June quarter.
So, this is what recalibration looks like in the age of machine-driven infrastructure: fewer managers, more chips, and a relentless focus on speed and scalability.
