Microsoft recently initiated its third large-scale restructuring in recent months. The target for the layoffs consists of about 4% of its global workforce, or 9,000 employees, following a reduction of approximately 6,000 in May, leading to a cumulative total of 15,000 layoffs over the two months. This marks the largest scale since 2023.
According to CNN and The Wall Street Journal (WSJ) on the 2nd (local time), the company explained in a statement released that day that the layoffs were "inevitable measures to create a competitive organization in a dynamic market environment." The layoffs were conducted across the board without distinction of rank, region, tenure, or team, and some parts of the institutional sector related to Xbox were included. However, it is reported that most of the layoffs were concentrated in organizations outside the gaming sector.
This restructuring was carried out in conjunction with the new fiscal year that began in July. The WSJ reported that the layoffs occurred across sales divisions and product and software development teams. Microsoft previously eliminated around 6,000 positions in May for similar reasons.
Microsoft, which significantly increased hiring during the pandemic, already began its downsizing process by reducing 10,000 employees on Jan. 1, 2023, and last year reduced part of its workforce in the institutional sector following its acquisition of Activision Blizzard. The total number of employees based on the fiscal year 2024 is approximately 228,000.
The underlying reason for this round of layoffs lies in the company's work transition strategy centered around artificial intelligence (AI). Microsoft is actively utilizing AI-based automation tools not only for external corporations but also for internal workforce structuring efficiency. Chief Executive Officer Satya Nadella noted that 20% to 30% of all code is already generated by AI and that the company is investing billions of dollars in AI infrastructure.
This trend is spreading across the industry. Major IT corporations such as Meta, Bumble, and Salesforce have also initiated a series of restructurings this year, and Andy Jassy, Chief Executive Officer of Amazon, recently mentioned that "AI will accelerate workforce reductions in the long term as it replaces certain jobs." The retail and pharmaceutical industries are also speeding up job integration and efficiency using technology.
Meanwhile, Microsoft recorded a first-quarter net profit of $25.8 billion, an 18% increase compared to the same period last year, due to strong performance in its cloud and AI service institutional sector. Microsoft is scheduled to announce its fourth-quarter fiscal year results at the end of this month.