Microsoft is set to reduce its global workforce by about 3% as part of a broader strategy to enhance its focus on developing cutting-edge artificial intelligence, the company confirmed on Tuesday.
This move is expected to impact around 7,000 positions across various departments within Microsoft’s global operations. As of June last year, the company, under the leadership of CEO Satya Nadella, employed 228,000 people worldwide.
A Microsoft spokesperson mentioned, “We continue to implement the organizational changes necessary to make the most of our company to succeed in a dynamic market.” This information was initially shared by CNBC.
These layoffs are partly aimed at streamlining the management structure, according to a spokesperson.
The announcement comes shortly after Microsoft reported quarterly earnings of $70.7 billion, which fell short of Wall Street’s expectations.
A Microsoft representative did not provide immediate comments upon request.
These layoffs follow earlier significant job cuts from January 2023, when the company reduced its workforce by 10,000. Additionally, a minor round of performance-related layoffs was announced earlier this year.
During trading on Tuesday, shares of Microsoft remained relatively stable.
As a major supporter of OpenAI, Microsoft is competing vigorously with companies like Elon Musk’s Xai, Mark Zuckerberg’s Meta, and Google in the AI development space.
The company plans to allocate up to $80 billion towards AI initiatives in the fiscal year 2025 alone.
Analyst Gil Luria from Da Davidson recently suggested that layoffs were inevitable, considering the high costs associated with developing advanced AI technology.
“We believe Microsoft needs to cut at least 10,000 positions to offset increased depreciation costs tied to capital expenditures,” Royer stated.
Microsoft is not alone in this trend; back in January, Meta also laid off 5% of its workforce in an attempt to address what Zuckerberg characterized as “low performance.”
