Microsoft Announces 6,000 Layoffs to Streamline Operations

Microsoft has announced a significant restructuring effort, which includes the layoff of 6,000 employees globally. This move is aimed at streamlining the company's management structure and improving operational efficiency. The layoffs, which account for less than 3% of the total workforce, will affect employees across various regions and job levels, including those within the LinkedIn division. The decision to reduce the workforce is part of a broader strategy to optimize the company's organizational framework and enhance its competitive edge in the rapidly evolving technology landscape.

Microsoft's spokesperson stated that the company will continue to push forward with organizational adjustments to ensure success in the fast-changing market. As of June 2024, Microsoft employed 228,000 people. The company regularly conducts layoffs to realign its workforce with priority development areas. In January 2023, Microsoft laid off 10,000 employees, primarily from the HoloLens augmented reality headset department and other hardware projects.

According to documents filed with the state of Washington, approximately 2,000 employees at Microsoft's headquarters in Redmond, Washington, will be affected by the latest round of layoffs. The layoffs are expected to begin on July 13. In recent years, Microsoft has faced pressure to control costs due to significant investments in data centers supporting its AI services and Azure cloud computing division. The company has stated that it plans to invest around $80 billion in server farms this fiscal year.

Last year, CEO Satya Nadella mentioned that AI has helped the company save on labor costs. During a recent meeting with JPMorgan, Microsoft's financial executive Bill Duff reiterated this point, stating that by applying AI to customer support, the company has reduced the need for human interaction, saving billions of dollars annually. Duff also mentioned that Microsoft is deploying AI across multiple departments to assist employees with tasks such as analyzing transaction compliance issues, drafting marketing materials, and other responsibilities. He added that the company regularly reassigns employees from traditional product lines to more growth-oriented business areas.

Late last month, Microsoft informed employees that it plans to outsource software sales to small and medium-sized customers through third-party companies. Earlier this month, Microsoft also reorganized some of its technical teams. This year, several other tech companies have announced layoff plans. In January, Meta announced plans to lay off approximately 5% of its workforce based on employee performance, while also hiring new employees to fill vacant positions. The following month, reports indicated that Salesforce was cutting over 1,000 jobs, primarily to make way for new AI-focused positions.