Microsoft has confirmed plans to lay off more than 9,000 employees—about 4% of its global workforce—as part of a major restructuring effort aimed at aligning with its evolving strategic goals. Announced on July 2, 2025, this move marks the tech giant’s most significant workforce reduction since 2023.
With a global headcount of over 228,000, Microsoft has not specified which departments or geographic locations will be most affected. However, the layoffs are expected to span various teams and job levels. A Microsoft spokesperson, speaking to AFP and CNBC, stated, “We continue to implement organisational changes necessary to best position the company and teams for success in a dynamic marketplace.” The spokesperson further noted, “Even in the best of times, we have regularly adjusted our workforce to meet the strategic demands of the business.”
This latest round of job cuts follows a series of reductions earlier in 2025. In January, Microsoft cut 1% of its staff based on performance. In May, another 6,000 positions were eliminated, followed by 300 more in June. The current layoffs are the second-largest in the company’s history, surpassed only by the 2014 reduction of nearly 18,000 roles.
Although Microsoft has not officially disclosed the reasons behind the downsizing, internal sources and industry analysts point to the growing impact of artificial intelligence on company operations. Microsoft has been rapidly integrating AI into its products and workflows, with CEO Satya Nadella recently noting that “20-30% of all the code” within the company is now written by AI. An internal memo, which has since become public, also revealed that AI adoption has been made mandatory in certain departments and is now linked to employee performance evaluations.
The company maintains that these technological advancements are designed to boost efficiency and free up employees to focus on more valuable tasks. As stated in the memo, AI tools are intended to “empower employees to spend more time focusing on meaningful work.”
Notably, the timing of this announcement—early in Microsoft’s fiscal year—is unusual, as such structural changes typically occur later. The scale and timing highlight a broader trend across the tech sector, where companies are streamlining operations while ramping up investments in AI-driven innovation.
