Microsoft has announced the layoff of approximately 6,000 employees — around 3% of its global workforce — in its largest job reduction since early 2023. The layoffs span all levels, teams, and geographies, with significant cuts in the company’s home state of Washington. The move comes despite strong financial results and a continued push into artificial intelligence.
Widespread Cuts Despite Strong Earnings
The layoffs were confirmed on Tuesday and include 1,985 workers in Washington state, with 1,510 based at Microsoft’s Redmond headquarters. These cuts impact software engineering, product management, Xbox, and even the LinkedIn division. The company did not link the layoffs to performance, distinguishing them from a smaller round of cuts in January that were performance-based.
Read More: Pakistan military gets social media boost after India flare-up
Microsoft reported a net income of $25.8 billion for the most recent quarter, exceeding Wall Street expectations, and has seen strong performance in its AI and cloud computing divisions. Its stock has performed robustly in 2025, closing at $449.26 on Monday, its highest this year. Last July, shares hit a record $467.56.
Cutting Management Layers
A key aim of the restructuring is to flatten Microsoft’s management hierarchy. The company is focusing on removing what it calls “unnecessary layers” to increase agility and foster high-performing teams. This mirrors similar moves by other tech giants like Amazon, which also cited excess management as a reason for job cuts earlier this year.
Amy Hood, Microsoft’s chief financial officer, noted in an April earnings call that the company was seeking to simplify its structure and improve efficiency by reducing managerial overhead.
AI-Fueled Transformation
The layoffs come as Microsoft doubles down on artificial intelligence. CEO Satya Nadella recently emphasized how AI is changing the nature of work, including internally, where he said up to 30% of code in some projects is now written by AI. The company has committed around $80 billion in the current fiscal year to AI infrastructure, including data centers.
However, experts caution that AI is not the sole reason for the layoffs. Daniel Zhao, a lead economist at Glassdoor, noted that cuts to management layers are more about organizational strategy than direct AI replacement. “You’re not expecting ChatGPT to replace the manager,” he said.
Employee Impact and Industry Context
The announcement struck a personal chord for some leaders inside the company. Scott Hanselman, a Microsoft vice president, posted a heartfelt message on LinkedIn, saying, “This is a day with a lot of tears.” He added that this was the first time he had to lay off employees to meet business goals he didn’t set himself.
Read More: ‘Mission: Impossible’… five things to know
The tech sector broadly continues to recalibrate following the pandemic-era hiring boom. Recent layoffs at CrowdStrike and earlier rounds at Amazon reflect a wider trend of companies reassessing growth strategies, spending, and workforce structures amid economic uncertainty and rising costs.