Microsoft to Cut 6,000 Jobs Amid AI Investment Push

Microsoft will lay off around 6,000 employees, or less than 3% of its workforce, as part of a company-wide restructuring aimed at managing costs while expanding its artificial intelligence operations.

Credit: MICROSOFT

The layoffs will affect staff across all levels and global locations, marking the largest round of job cuts since the company eliminated 10,000 roles in 2023.

The move comes as Microsoft continues to shift resources toward AI development, which it views as a key growth area. The company had 228,000 employees as of June 2023.

“We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace,” a Microsoft spokesperson said.

The job cuts are not related to performance issues, unlike a smaller round of layoffs in January.

Microsoft’s decision follows a broader trend among major technology firms, including Google, which has also reduced headcount while increasing AI investments.

Despite reporting strong quarterly results and better-than-expected growth in its Azure cloud-computing business, Microsoft is facing narrowing profit margins. Microsoft Cloud margins fell to 69% in the March quarter, down from 72% a year ago.

The company has allocated USD 80 billion in capital spending for the current fiscal year, with most of it directed toward expanding data centres to support AI services.

D.A. Davidson analyst Gil Luria said the layoffs reflect Microsoft’s efforts to manage the financial pressure from its AI investments. He estimated that Microsoft would need to cut at least 10,000 jobs annually to offset increased depreciation from capital expenditures.

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• Microsoft to lay off around 6,000 employees, or less than 3% of its workforce

• Cuts will span all levels and global regions, unrelated to performance

• Company investing USD 80 billion in AI-focused capital spending this fiscal year

Source: REUTERS