Microsoft has confirmed its largest workforce reduction since 2023, laying off approximately 6,000 employees globally; about 3% of its total workforce of 228,000.
The cuts affect teams across all departments, roles, and geographical locations, according to a company spokesperson.
Strategic Restructuring
The layoffs, which Microsoft emphasizes are not performance-related, come as part of a strategic restructuring effort aimed at “continuing to implement organizational changes necessary to best position the company for success in a dynamic marketplace,” as stated by a Microsoft spokesperson to CNBC.
A key focus appears to be reducing management layers to streamline operations and increase agility – a strategy similar to recent moves by Amazon, which also eliminated what it termed “unnecessary layers” in its organization.
In Washington state alone, Microsoft is reducing its Redmond headquarters staff by 1,985 people, including 1,510 office positions. About 17% of the affected personnel were classified as managers, while product management and technical program management roles accounted for about 30% of the Washington cuts.
Surprising Timing Amid Financial Success
The timing of these layoffs has surprised many, coming just weeks after Microsoft reported strong quarterly earnings that exceeded forecasts. The company posted $25.8 billion in net income for the latest fiscal quarter, with particularly robust performance from its cloud computing division.
On Monday, Microsoft shares closed at $449.26, their highest price this year, though still below the all-time high of $467.56 reached last July.
High-Profile Casualties
Notably, the layoffs included Gabriela de Queiroz, Microsoft’s director of AI.
De Queiroz announced her departure on LinkedIn, writing:
Bittersweet news to share: I was impacted by Microsoft’s latest round of layoffs. Was I expecting it? Maybe. These days no matter how hard you work, how much you advocate for your company, or how much visibility to bring — none of that makes you immune to restructuring.
This high-level AI department cut has raised eyebrows, particularly as Microsoft continues making investments in AI technology.
Expert Analysis
Pradeep Sanyal, AI and data leader for IT consultancy Capgemini and a former CIO, said that IT leaders should pay attention to these developments.
CIOs should take note, though not necessarily panic…This is a canary moment. When even top-tier AI leaders are not immune, it highlights how volatile the AI labor market is, both inside and outside vendor walls.
Ongoing Technology Investments
Despite the layoffs, Microsoft appears to be continuing its major technology investments.
The company plans to invest $80 billion in data centers during 2025 and is partnering with OpenAI on Project Stargate, described as a “$100 billion mega data center.” The company is also expanding its AI-powered Copilot across Microsoft 365, Azure, and Dynamics 365.
These workforce changes come at a time when Microsoft, like many technology companies, is balancing big AI investments with organizational efficiency.
As CEO Satya Nadella stated in January regarding the company’s cloud strategy:
When you’re dealing with a platform shift, you need to rethink incentives and your go-to-market approach. It’s important to double down on the new opportunities instead of sticking to what worked in the past generation.
