Microsoft confirms its most considerable workforce reduction since 2023, cutting nearly 9,000 jobs. The decision affects approximately 4% of its 228,000 employees and impacts the gaming division particularly hard. The cuts come amid broader industry layoffs and growing AI adoption.
What’s Happening & Why This Matters
On Wednesday, Microsoft officially announced a fresh round of layoffs affecting roughly 9,000 employees worldwide. This marks the company’s third significant cut in recent months and its biggest since last year’s reduction of 10,000 jobs.
A spokesperson explained the cuts as part of “organizational and workforce changes” to keep Microsoft competitive in a fast-changing market. The company is streamlining its management layers to boost agility and employee productivity through the use of new technologies.
The gaming division took a significant hit. Xbox head Phil Spencer wrote to employees confirming layoffs and the cancellation of high-profile projects like Everwild and Perfect Dark. Spencer emphasized the need to focus on strategic growth areas and increase operational efficiency.
Affected employees will receive severance packages including pay, healthcare, and job placement support. Microsoft also offers affected Xbox staff priority when applying to open roles within the gaming unit.
These cuts follow earlier layoffs in May, which resulted in approximately 7,000 employees leaving. Microsoft’s total workforce stood at 228,000 as of July 2024.
Industry-wide, leading tech companies like Meta, Intel, and Amazon have also announced layoffs amid economic pressures and rapid AI integration. Microsoft CEO Satya Nadella said earlier this year that AI now generates 20-30% of the company’s code. This investment in AI infrastructure plays a role in reshaping workforce needs.
Despite the layoffs, Microsoft reported an 18% increase in quarterly profits, reaching $25.8 billion, driven by strong growth in its cloud and AI businesses. The company’s next earnings report is scheduled for release later this month.
TF Summary: What’s Next
Microsoft’s job cuts reflect the growing influence of AI and market shifts on tech employment. While painful for many workers, the changes aim to position the company for long-term success and innovation.
As AI automates more tasks, TF predicts a continued recasting of the workforce in tech firms. Microsoft’s focus remains on cloud services, AI, and strategic areas. The struggle between efficiency and innovation continues….
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