Despite reporting strong quarterly results and double-digit growth in its core businesses, Microsoft is undergoing what it calls “organizational changes necessary to best position the company for success in a dynamic marketplace.” The company says these layoffs are not performance-related, but rather a strategic realignment to remain competitive amid rapid technological shifts-especially as it invests tens of billions of dollars in AI and data infrastructure.
The cuts affect over 6,000 employees worldwide, out of Microsoft’s total workforce of 228,000 as of June 2024. Roles impacted span engineering, product, marketing, AI strategy, LinkedIn, Xbox, and more. While all levels are affected, middle and senior management positions have been hit hardest as Microsoft seeks to “flatten” its management hierarchy and increase each manager’s span of control. The majority of layoffs are in the United States, particularly at Microsoft’s Redmond, Washington headquarters, where nearly 2,000 jobs were cut.
Even high-profile leaders, such as Gabriela de Queiroz, Director of AI for Microsoft for Startups, were among those let go-highlighting the breadth of the restructuring and raising concerns within the tech industry about the future of AI leadership at Microsoft.
Microsoft is aggressively investing in artificial intelligence, cloud computing, and related infrastructure. This expansion requires significant capital, prompting the company to cut costs elsewhere, including workforce reduction. The layoffs are designed to reduce management layers, improve agility, and focus resources on high-growth areas. The company’s leadership has emphasized the need for “high-performing teams” and a leaner organization to adapt quickly to market changes. Unlike some tech layoffs triggered by poor earnings, Microsoft’s cuts come during a period of strong financial performance, signaling a proactive rather than reactive restructuring.
Affected employees will remain on the payroll for 60 days after termination and are reportedly eligible for rewards and bonuses. Microsoft has also introduced new policies around rehire bans and performance management as part of its broader organizational overhaul.
Microsoft’s move follows similar restructuring efforts by other tech giants, such as Amazon and CrowdStrike, which have also cited the need to eliminate “unnecessary layers” and refocus on core priorities in the face of rising AI investments.
