MICROSOFT CUTS 9,000 JOBS AS AI RESHAPES WORKFORCE

Microsoft has announced a significant round of layoffs, slashing approximately 9,000 jobs, or just under 4% of its global workforce of 228,000, as it streamlines operations to fuel its $80 billion Al investment.

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The cuts span teams, geographies, and experience levels, with a focus on reducing management layers to boost agility. This is Microsoft's largest staff reduction since 2023, when it eliminated 10,000 positions, and follows earlier 2025 cuts of 6,000 in May and 300 in June, signaling a broader shift in priorities.

The layoffs, effective from the start of Microsoft's 2026 fiscal year, hit divisions like Xbox, LinkedIn, and international offices, with about 2,000 roles cut in Washington state alone, including 1,510 in-office and 475 remote workers. CEO Satya Nadella, speaking at a town hall, framed the move as a strategic realignment, not performance-based, to position the company for a dynamic market driven by Al. Affected employees, notified in July, face a tough job market, with severance packages offering 16 weeks' pay, though posts on X highlight frustration at the taxed payouts.

The cuts come despite Microsoft's strong financials—$245 billion in 2024 revenue and a 14% growth forecast for the June quarter, fueled by Azure cloud and productivity software. CFO Amy Hood emphasized leaner teams to maintain 46% operating margins, but the scale of layoffs, including high-profile roles like Al Director Gabriela de Queiroz, has sparked debate about Al's role in displacing human labor, raising questions about the company's long-term workforce strategy.

AI'S GROWING FOOTPRINT

Microsoft's layoffs reflect a deeper pivot toward AI-driven efficiency. Nadella revealed that AI, particularly tools like Copilot, now writes up to 30% of code for some projects, with CTO Kevin Scott projecting this could hit 95% by 2030.