Microsoft Cuts 9,000 Jobs, 4% of Workforce, to Focus on AI

Microsoft has announced its largest round of job cuts since 2023, with 9,000 employees facing redundancy as the tech giant restructures its operations. This move is part of a broader strategy to streamline operations and focus on artificial intelligence (AI) initiatives. The layoffs, which affect just under 4% of Microsoft's global workforce, bring the total number of job cuts this year to 15,000. The company had previously eliminated more than 15,000 jobs since January 2024, including its biggest ever round in 2025, which saw around 11,000 cuts.

Despite posting an 18% year-over-year increase in net income last quarter—reaching $25.8 billion—Microsoft is moving ahead with significant headcount reductions. The company cited a need to reduce organizational layers with fewer managers and streamline its products, procedures and roles. In its official statement, Microsoft said: “We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace.”

The layoffs are part of a broader restructuring effort that has now seen over 15,000 jobs eliminated this year, including 6,000 positions in May. This latest round is expected to impact sales, customer-facing roles, and the Xbox gaming division. Xbox head Phil Spencer told staff the company would “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 latest round of layoffs includes significant reductions in the Xbox gaming division, with King, a subsidiary of Microsoft, losing 200 employees. This is the fourth layoff round in 18 months, following the Activision deal. The job cuts are part of a broader restructuring effort aimed at enhancing operational efficiency and aligning resources with strategic priorities. Microsoft's focus on AI is evident in its recent investments and initiatives, which are expected to drive future growth and innovation.

Microsoft’s move reflects a wider trend among major technology companies, many of which are undergoing similar workforce reductions as they double down on artificial intelligence. The company has invested billions in AI infrastructure, and CEO Satya Nadella recently noted that up to 30% of Microsoft’s code is now written by AI tools. While Microsoft has not directly attributed the layoffs to AI replacing human workers, the timing and focus of the cuts suggest a shift toward a leaner, more automated organization.

The layoffs underline that the job market in tech is tightening even as companies like Microsoft continue to deliver strong earnings. The impact of these layoffs is significant, not only for the employees affected but also for the broader tech industry. The job cuts reflect a trend of cost-cutting measures and strategic realignments among major tech companies as they navigate a rapidly changing market landscape. Microsoft's decision to prioritize AI development underscores the growing importance of this technology in shaping the future of the industry. As the company continues to streamline its operations, it remains to be seen how these changes will affect its long-term competitiveness and market position.