Microsoft cuts around 3% of the global workforce, affecting thousands of employees across teams, management levels and regions.
“We continue to implement the organizational changes necessary to make the most of our company to succeed in a dynamic market,” a company spokesperson told CNBC.
Microsoft cuts 3% of its workforce, the biggest layoff since 2023
The move follows a strong revenue report just weeks ago, when Microsoft unlocked $25.8 billion in net profit in the quarter, providing a positive outlook. Still, the company is making structural adjustments, reflecting similar moves by other tech giants looking to trim layers to move faster.
At the end of June, Microsoft had 228,000 employees worldwide. The company doesn’t share the exact number affected, but this could be the biggest cut as it eliminated 10,000 roles last year. In January 2024, Microsoft laid off 1,900 employees across the gaming division just one day after reaching a $3 trillion valuation.
Earlier this year, Microsoft made a small round of performance-related layoffs. The latest cut has nothing to do with performance, the spokesman revealed. One of the goals is to flatten your management. This is a shift reflecting Amazon’s comments in January regarding the removal of “unnecessary layers.”
Microsoft is not alone. Last week, cybersecurity company Crowdstrike announced it was cutting its workforce by 5%. In March, Retail Giant Amazon announced plans to lift 14,000 managers to save $3.5 billion a year.
In January, CEO Satya Nadella pointed to a change in sales execution after the slower growth of the blue-and-mortar cloud, which is less than expected, was slower than expected, outside of AI. Meanwhile, AI-driven cloud performance beats projections. Nadella suggested the need to rethink how Microsoft approaches incentives and market strategies during these platform shifts.
“How do you tweak the incentives and get into the market?” Nadella said. “At the point of the platform shift, you want to make sure that even the new design victory is leaning, and don’t keep doing what you did with the previous generation.”
Microsoft shares closed at $449.26 on Monday. This year is the highest level ever, approaching the $467.56 record since last July.
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