Depositphoto / Microsoft
Microsoft has announced the layoff of about 6000 employees, which is almost 3% of the company’s entire team. And they can thank AI.
The layoffs will affect all divisions, including international offices and subsidiaries like LinkedIn. This time, the emphasis on layoffs will be on the management level. Back in April, Microsoft CFO Amy Hood hinted that they wanted to increase the company’s flexibility by reducing levels with fewer managers. And now the company’s spokesperson Pete Wootton has explained that large-scale layoffs are part of «organizational change» for «success in a dynamic market».
Employees at Microsoft’s Redmond headquarters – about 2,000 people, according to a public filing – will also be laid off. The layoffs are scheduled to begin on July 13. In total, the company reported that as of June last year, it employed 228,000 people worldwide, 55% of whom were in the United States.
The tech giant does not hide the fact that AI allows saving on staff. CFO Bill Duff said that the company «saves hundreds of millions of dollars a year» by using AI to support customers and reduce the need for human interaction. Artificial intelligence is used to automate the analysis of transactions for compliance, create marketing materials, and other tasks.
At the same time, the company regularly reorients employees from outdated areas to initiatives that are gaining momentum. A few weeks ago, Microsoft warned employees that it would outsource its work with small and medium-sized businesses. Some technical teams have already been restructured.
Microsoft is not alone: other tech giants have announced layoffs this year. Meta announced a 5% reduction in staff while simultaneously recruiting new staff. Salesforce has laid off more than 1000 people to open up positions focused on artificial intelligence.
Thus, the company’s move was the largest job cuts at Microsoft since the beginning of 2023. Two years ago, the company laid off more than 10,000 employees, including the HoloLens team and other hardware areas. In January 2024, the following were laid off 1900 employees from Activision Blizzard and Xbox divisions. And in May of the same year, the company closed several studios — including Tango Gameworks (Hi-Fi Rush) and Arkane Austin (Redfall). Tango later came to life through a partnership with Krafton. In September, another 650 Xbox employees were restructured after the acquisition of Activision by Blizzard.
Still, the company remains profitable despite the layoffs: Microsoft has exceeded Wall Street’s forecasts for four quarters in a row. In March 2024, the staff was even 2% larger than a year ago.