Microsoft said on Tuesday that it is laying off 3% of its employees from all over the world, at different levels and teams. This would come to around 6,000 people. “We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace,” a Microsoft spokesperson told CNBC.
This news comes in spite of better-than-expected results with a net quarterly income of $25.8 billion, and an upbeat forecast in late April.
This would be the company’s largest round of layoffs ever since it eliminated 10,000 roles in 2023. While Microsoft had announced a small round of performance-based layoffs, these new layoffs are not based on performance, according to the spokesperson. The spokesperson also mentioned these job cuts aimed to get rid of “unnecessary layers” in the organization, which is similar to what Amazon said when it announced job cuts in January.
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Microsoft said it would be reducing headcount tied to its Redmond headquarters by 1,985 people, including 1,510 in office.
In January, Microsoft CEO Satya Nadella told analysts that the company would make sales execution changes after the company delivered slower growth than expected in Azure cloud revenue that wasn’t tied to artificial intelligence. Performance in AI cloud growth outdid internal projections. “How do you really tweak the incentives, go-to-market?” Nadella said. “At a time of platform shifts, you kind of want to make sure you lean into even the new design wins, and you just don’t keep doing the stuff that you did in the previous generation.”
These layoffs come amid a rise in job cuts all over the tech industry. Last year, there were more than 150,000 job cuts across 549 companies, according to independent layoffs tracker Layoffs.fyi. As an increasing number of tech companies rely on AI and automation for their work, these layoffs highlight rising concerns over human impact, and what might be at stake amid increased innovation.