Microsoft lays off 6,840 employees globally in largest job cuts since 2023

Microsoft has announced that it is laying off at least 3% of its global workforce, impacting roughly 6,840 employees based on its last reported headcount of 228,000. The move, described as a strategic effort to streamline operations and reduce management layers, marks the company’s largest workforce reduction since it cut 10,000 jobs in 2023.

The layoffs, which span all levels, teams, and geographies, including Microsoft-owned LinkedIn, come despite the company reporting robust financial performance, with a quarterly net income of $25.8 billion in late April 2025.

“We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace,” a Microsoft spokesperson said, emphasising that the cuts are not performance-based, unlike a smaller round of layoffs in January 2025.

The company’s focus is on flattening its corporate structure, particularly by reducing layers of management, to enhance agility and efficiency. This approach mirrors recent moves by competitors like Amazon, which in January announced job cuts to address “unnecessary layers” in its organisation.

The layoffs follow a period of strong financial results for Microsoft, with its stock closing at $449.26 on Monday, May 12, 2025, the highest price this year, though still below its record high of $467.56 in July 2024. The company’s upbeat forecast and better-than-expected quarterly earnings underscore its resilience amid a turbulent tech sector, driven by growth in its artificial intelligence (AI) and cloud computing segments.

However, challenges in non-AI-related Azure cloud revenue prompted Microsoft CEO Satya Nadella to signal sales execution changes earlier this year.

Microsoft’s strategic realignment amid industry trends

Microsoft’s decision reflects broader trends in the tech industry, where companies are increasingly prioritising leaner operations and AI-driven efficiencies. Last week, cybersecurity firm CrowdStrike announced a 5% workforce reduction, citing AI advancements as a factor in streamlining operations.

Similarly, Microsoft’s layoffs align with its strategic pivot toward high-growth areas like AI and cloud computing, where it has seen significant success. Nadella noted in January that while Azure’s non-AI cloud growth lagged, AI-related cloud revenue exceeded internal projections, prompting a reevaluation of incentives and go-to-market strategies.

“At a time of platform shifts, you kind of want to make sure you lean into even the new design wins,” Nadella said, highlighting the need to adapt to evolving market dynamics.

The layoffs also follow a series of smaller workforce reductions at Microsoft over the past year, including 650 Xbox employees in September 2024, 1,000 from HoloLens and Azure teams in June 2024, and 2,000 performance-based cuts in January 2025. These moves have sparked concerns among employees about job security, particularly as the company tightens performance standards and shifts toward a higher engineer-to-manager ratio.

Analysts suggest that Microsoft’s restructuring is part of a broader industry response to economic uncertainties and technological advancements.

“Layoffs in 2025 are reshaping the workforce,” a Forbes report noted, pointing to downsizing across tech, retail, and logistics sectors, with companies like Meta, Amazon, and CrowdStrike also trimming staff.

The integration of AI, which Nadella revealed accounts for up to 30% of Microsoft’s code production, may be reducing the need for certain roles while creating demand for specialised skills. However, Microsoft has not explicitly linked the layoffs to AI efficiencies, unlike CrowdStrike, which cited AI as a direct factor in its job cuts.

The economic impact of Microsoft’s layoffs could ripple through tech hubs like Redmond, Washington, where the company is headquartered. With an estimated 6,000 jobs affected globally, local economies and workers face uncertainty, though Microsoft’s stable headcount strategy, replacing some roles with new hires, may mitigate long-term losses.

The company’s focus on reducing management layers could also reshape its corporate culture, potentially boosting efficiency but risking morale among remaining staff.