Microsoft To Lay Off 9,000 Employees, About 4% of Workforce

Microsoft announced it will lay off around 9,000 employees on Wednesday. The decision affects nearly 4% of its workforce across different teams, roles, and locations.

According to Reuters, Microsoft employed around 228,000 people as of June 2024. Since then, the company has undergone several rounds of layoffs. It announced job cuts from its Xbox gaming units in September, followed by a smaller reduction of less than 1% in January. The most significant wave came in May this year, affecting around 6,000 workers.

The latest layoffs will impact roles in marketing and the gaming division, and the company also plans to reduce the number of managers to streamline its organizational structure.

Experts suggest the company is also looking to cut costs following major investments in AI technology. OpenAI and Microsoft are reportedly negotiating a multibillion-dollar partnership.

The first wave of layoffs in this round was reported in Seattle and at Microsoft’s Barcelona-based King division, where the company cut 10% of its staff—about 200 employees.

“We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” said a spokesperson from Microsoft in an email.

According to CNBC, the announcement comes at the end of Microsoft’s fiscal year, a time when the company typically makes structural adjustments to prepare for the next fiscal cycle.

In 2023, Microsoft laid off 10,000 employees, and its record was in 2014, when 18,000 jobs were cut following the acquisition of Nokia.

A source familiar with the matter explained that, this time, Microsoft wants to reduce layers between individual contributors and top executives.

“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,” wrote  Phil Spencer, Microsoft’s CEO of gaming, in the internal memo sent to employees.

Microsfort reported a $26 billion in net income for the March quarter, keeping its ranking as one of the most profitable companies in the S&P 500 index.