Microsoft Corporation is gearing up for another major round of layoffs, with thousands of jobs expected to be cut as early as July 2024, according to a Bloomberg report. The move comes as the tech giant continues to shift its strategic focus toward artificial intelligence (AI) while tightening spending in other departments.
The upcoming layoffs—reportedly targeting sales and other teams—are said to follow Microsoft’s previous round of job cuts in May 2024, which saw around 6,000 employees let go, primarily from product and engineering departments.
AI Takes Center Stage as Microsoft Streamlines
Microsoft’s growing investments in AI are playing a central role in its ongoing workforce restructuring. The company has planned a capital expenditure of $80 billion for the current fiscal year, primarily directed at expanding data center infrastructure to support its AI services.
This massive investment, while positioning Microsoft at the forefront of the AI revolution, is also prompting cost-cutting in other areas. According to sources cited by Bloomberg, the company is trimming roles across several divisions, with sales teams expected to take a major hit.
However, the layoffs will not be limited to sales alone, and the final timing of the announcement—likely in early July—could still shift. Microsoft’s fiscal year ends in June.
Satya Nadella: “Not a Reflection of Performance”
Microsoft CEO Satya Nadella previously addressed concerns during a company town hall following the May layoffs. He clarified that the decision to reduce headcount was not linked to employee performance, but rather part of a larger organizational realignment as the company pivots toward AI.
Nadella acknowledged the emotional impact on affected employees but stressed that these changes are necessary for long-term growth and innovation. “It’s a strategic move, not a reflection of shortcomings in productivity or talent,” he said.
Layoffs Across the Tech Sector
Microsoft isn’t alone in recalibrating its workforce. Amazon CEO Andy Jassy recently commented that the rollout of generative AI will likely reduce Amazon’s corporate workforce in the coming years, echoing a broader industry trend.
As of June 2024, Microsoft employed around 2,28,000 people, and the new round of layoffs could significantly affect that number. Notably, Microsoft had already begun outsourcing more sales functions to third-party firms earlier this year—especially for small and mid-size customer segments.