Microsoft has confirmed its largest round of layoffs in two years: approximately 9,000 employees, around 4% of its global workforce, will lose their jobs in divisions such as Xbox, sales, and marketing.
The company, led by Satya Nadella and Xbox chief Phil Spencer, explained that the move is part of a strategy to reduce management layers, increase agility, and redirect resources toward artificial intelligence and cloud computing. This layoff follows the termination of 6,000 employees in May, over 300 in June, and now nearly 9,000 in July.
A significant portion of the cuts will impact the sales division, which employs about 45,000 people, as well as the Xbox unit, where projects are being canceled and studios shut down.
Why this massive layoff right now?
The answer lies in the $80 billion Microsoft has committed to its AI infrastructure for fiscal year 2025. To fund this investment, the company needs to cut costs in other areas, like its internal sales force, and restructure to become more agile.
Additionally, an Xbox executive recently suggested that laid-off colleagues use AI to manage emotional stress and build résumés, although the comment sparked skepticism among affected workers.
Despite the layoffs, Microsoft remains in a strong financial position: it reported $70 billion in revenue for Q3 of fiscal 2025, a 13% year-over-year increase, and $25.8 billion in net income, up 16% from the previous year.
What does this mean for employees, investors, and the industry?
- Employees: face growing uncertainty, especially in sales, marketing, and Xbox.
- Investors: may see this as a strategic move to reduce costs and strengthen Microsoft’s leadership in AI.
- Competitors: other tech giants could follow suit, cutting staff to shift focus toward AI development.