Microsoft Corp. announced on Wednesday that it will cut approximately 9,000 jobs, amounting to nearly 4% of its global workforce of 228,000 employees, as the company intensifies its commitment to artificial intelligence (AI) and cloud infrastructure.
The move marks Microsoft’s second-largest layoff round in 2025, following a series of job cuts earlier this year that included a reduction of 6,000 positions in May and smaller rounds in January and June.
The layoffs span multiple departments, geographies, and seniority levels, with significant impact on the Xbox gaming division and studios such as King, ZeniMax, and Turn.
Projects like Perfect Dark and Everwild have reportedly been scrapped as part of the restructuring.
According to Microsoft’s Chief Financial Officer Amy Hood, the company is “building high-performing teams and increasing our agility by reducing layers with fewer managers,” a strategy aimed at streamlining decision-making and boosting operational efficiency.
A Microsoft spokesperson stated, “We are continuing to make organizational adjustments that are essential to optimally position the company and its teams for success in a rapidly changing market”.
The company’s approach includes flattening management structures and leveraging AI-powered tools to automate routine tasks, thereby reducing the need for certain roles.
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Microsoft’s aggressive push into AI comes with substantial financial commitments.
The company has pledged $80 billion in capital spending for fiscal year 2025, primarily directed toward expanding data centers and cloud infrastructure to support AI workloads.
This investment is necessary to keep pace with soaring demand for generative AI services like GitHub Copilot, which now boasts over 15 million users and automates software development tasks previously handled by engineers.
However, these investments have weighed on Microsoft’s margins, with the June quarter’s cloud margin expected to shrink compared to last year.
The company’s AI strategy includes deepening partnerships with organizations such as OpenAI, the creator of ChatGPT, and recruiting top AI talent, even as it reduces headcount in other areas.
The layoffs at Microsoft mirror broader trends in the tech sector, where companies like Meta, Alphabet, and Amazon have also announced significant job cuts amid rising costs and economic uncertainties.
Industry analysts attribute the wave of layoffs—over 100,000 tech jobs lost globally in 2025—to the disruptive impact of AI and the need for companies to remain competitive by reallocating resources to high-growth areas.
Microsoft’s latest cuts, while painful for affected employees, underscore the company’s determination to lead in the AI era, even as it reshapes its workforce and business priorities for long-term growth.
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