Microsoft Announces Mass Layoffs in Push to Streamline Operations

‘We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace,’ a company spokesperson says.

People walk by a Microsoft store in New York City on July 26, 2023. Samira Bouaou/The Epoch Times

Microsoft has begun laying off nearly 3 percent of its global workforce—roughly 6,000 jobs—in its biggest round of job cuts in more than two years, as the company flattens its management structure and reshapes operations to stay competitive in what a spokesperson described as a rapidly evolving market.

The layoffs include 1,985 workers in Washington state, where the company is headquartered, according to a WARN notice filed with the state’s Employment Security Department on May 13. The job eliminations take effect on July 12 and are classified as permanent.

“We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace,” a Microsoft spokesperson told The Epoch Times in an emailed statement in response to an inquiry about the layoffs.

The company described the move as part of a broader effort to boost agility by reducing the number of managers, cut redundancy by streamlining processes and roles, and allow employees to focus more on “meaningful work” by leveraging artificial intelligence (AI) and other technologies.

While Microsoft did not confirm the number of affected employees in its statement to The Epoch Times, the 3 percent figure—amounting to approximately 6,000 jobs—was reported by the Associated Press, citing internal notifications sent to staff impacted by the cuts. The layoffs span multiple divisions—including LinkedIn and Xbox—and affect employees across various levels and geographies.

The restructuring follows a smaller, performance-based layoff in January and marks Microsoft’s largest workforce reduction since early 2023, when the company cut 10,000 jobs amid a broader post-pandemic correction in the tech sector.

The latest job reductions come despite the company’s strong recent financial performance. Microsoft reported higher-than-expected profits in its most recent quarter, driven by growth in cloud services and artificial intelligence tools. CEO Satya Nadella credited demand for Microsoft’s AI-powered offerings—such as its Copilot assistant—and said the company is rapidly expanding its global data center network to keep up.

While Microsoft executives didn’t explicitly address job cuts on the company’s April 30 earnings call, they repeatedly emphasized efficiency gains, a flattened management structure, and cost controls as key reasons for improved profit margins.

Chief financial officer Amy Hood said that operating expenses were lower than expected due to the company’s focus on cost efficiencies as well as investments that shifted into the fourth quarter.

“Operating margins increased 1 point year over year to 46 percent, better than expected as we continue to focus on building high-performing teams and increasing our agility by reducing layers with fewer managers,” she said, providing the most direct clue in the call of incoming white-collar layoffs.

Looking ahead, Microsoft said it expects full-year operating margins to rise slightly despite elevated spending on cloud and AI infrastructure, a further signal that the company was looking to workforce reductions as a way to offset rising capital expenditures and preserve profitability in a high-investment environment.