Around 9,000 jobs will be cut by Microsoft.
The Micorsoft reductions, which showed a tighter labor market at major tech firms, came after around 6,000 posts were eliminated in the previous quarter.
In yet another sign of the growing employment market in the tech sector, Microsoft announced on Wednesday that it would cut around 4% of its workforce, or about 9,000 jobs.
The layoffs come after a decrease of about 6,000 jobs in May. According to Microsoft’s most recent disclosure, the company had 228,000 employees at the end of June 2024.
Despite the uncertainty surrounding the economy in recent months, Microsoft has maintained its multibillion-dollar quarterly earnings. Investors have increased its market worth to over $3.7 trillion as a result of its surprising strength in its most recent earnings announcement. However, Microsoft is now investing heavily in artificial intelligence, including spending billions of dollars to lease and construct data centers in order to meet the need for cloud computing and AI.
The reductions were further evidence that the size of Microsoft’s workforce may be affected by its advancements in artificial intelligence. Github Copilot, Microsoft’s A.I. tool for programming and software development, has over 15 million users at this point, and business leaders have made public statements about how well it has performed.
Executives at various other tech businesses have suggested that they anticipate some of their employees will be replaced by artificial intelligence. Amazon’s CEO, Andy Jassy, informed staff members last month that “as we get efficiency gains from using A.I. extensively across the company,” he anticipates the company’s corporate workforce to shrink over the next years.
The intense competition for the best A.I. researchers contrasts sharply with the gloomy prognosis for rank and file tech workers. For instance, Meta has been actively recruiting top researchers, with job offers that have reached $100 million at times.
(The New York Times has filed a lawsuit against Microsoft and its partner OpenAI, alleging copyright violation of news material pertaining to A.I. systems. The two businesses have refuted the charges.)
Since Microsoft began its new fiscal year on Tuesday, the cuts were widely anticipated internally. They work across several areas and positions in the organization, such as the video game industry and sales teams.
The business stated that “we continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace.”
In a message to his division on Wednesday, Phil Spencer, the head of Microsoft’s video game division, stated that the cuts were a part of “the discipline to prioritize the strongest opportunities” and concentrate on the areas with the greatest promise.
Microsoft leaders, like other big tech firms, have been discussing in recent months the need to cut red tape and have each manager manage a larger workforce.
“We’re enhancing our agility by cutting layers with fewer managers,” Microsoft’s finance head Amy Hood said during an investor call in late April.
In the last round of layoffs, managers were cut, but they weren’t the main focus. According to information published by The Seattle Times from Microsoft’s home state of Washington, the majority of the layoffs fell on software engineers and independent product managers.
