The tech company is looking to simplify its internal structure and focus on strategic areas like cloud computing and artificial intelligence.
Microsoft announced on Wednesday a new round of layoffs that will affect around 9,000 employees, representing less than 4% of its global workforce, which totaled 228,000 as of the end of June 2024. This decision marks the start of its fiscal year 2026 and is part of a reorganization process aimed at adapting the organizational structure to a constantly evolving market.
“We are continuing to implement necessary organizational changes to best position the company and its teams in a dynamic market,” a Microsoft spokesperson explained in an emailed statement.
This new adjustment adds to previous waves of layoffs carried out by the Redmond, Washington-based multinational throughout the year. In January, the company laid off less than 1% of staff due to performance reasons. In May, it cut more than 6,000 positions and, in June, at least 300 more. In 2023, Microsoft had already undergone a significant restructuring that affected 10,000 workers.
Restructuring and Strategic Focus
A source close to the company told CNBC that Microsoft is looking to reduce the middle management layers that separate frontline employees from top executives. This simplification aims to increase agility and improve operational efficiency.
Phil Spencer, CEO of Microsoft’s gaming division, explained in an internal memo that, to ensure the sustained success of the Gaming sector, non-strategic roles will be eliminated or reduced, and unnecessary management levels will be removed: “We are going to focus on key areas of strategic growth and follow Microsoft’s example by removing management layers to increase our agility and effectiveness.”
Solid Financial Context
The announcement comes at a time when Microsoft is maintaining remarkable financial health. In the first quarter of 2024 (March), the company reported revenues of $70 billion and a net income close to $26 billion. These figures exceeded Wall Street’s expectations and solidified the company as one of the most profitable in the S&P 500 index.
For the quarter ending in June, the company expects a year-over-year revenue growth of 14%, driven by the expansion of its cloud services (Azure) and corporate software subscriptions (like Microsoft 365). On the stock market, Microsoft shares closed at their all-time high of $497.45 on June 26, although they experienced a slight decline of 0.2% this Wednesday.
A Recurring Pattern in the Tech Sector
Microsoft is not the only tech company that has reduced staff in 2025. Other companies in the sector, such as Autodesk, Chegg, and CrowdStrike, have also executed significant workforce adjustments. In fact, on the same Wednesday, payroll processing firm ADP reported that the U.S. private sector lost 33,000 jobs in June, compared to the 100,000 growth anticipated by Dow Jones analysts.
The wave of layoffs in tech companies reflects a new paradigm where efficiency and focus on high-growth segments, such as artificial intelligence, cloud computing, and automation, are prioritized over the unchecked growth that characterized previous years.
Microsoft Looks to the Future with Ambition
Despite the adjustments, forecasts for Microsoft remain ambitious. Dan Ives, an analyst at Wedbush Securities, recently stated that the company could reach a market valuation of $5 trillion in the next 18 months, supported by its leadership in the cloud sector, the expansion of Copilot in corporate products, and its strong position in the race for artificial intelligence.
The current restructuring, while painful for affected employees, aims precisely to reinforce that leadership and prepare Microsoft for a new phase of growth in an increasingly competitive landscape.
Source: cnbc