One of the top tech firms in the world, Microsoft, has announced plans to fire roughly 9,000 workers globally, the most significant layoffs since 2023.
The layoffs, which will impact slightly less than four percent of its roughly 228,000 employees worldwide, are part of a larger plan to simplify operations, cut management levels, and shift towards automation and artificial intelligence (AI).
This action comes after a number of smaller layoffs earlier this year, which has raised questions about job security in the tech sector in light of the economy’s rapid change.
The layoffs, which were made public on Wednesday, affect a number of divisions, including Xbox, sales, marketing, and global operations; early reports did not identify any particular regions.
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The company claims that the reductions are meant to “streamline operations and reduce layers of management between top leadership and individual contributors”. The need for these adjustments was emphasised by a Microsoft representative, who said, “We continue to implement organisational changes necessary to best position the company and teams for success in a dynamic marketplace.”
Series of layoffs
This round of layoffs comes after major layoffs earlier in the year, including the elimination of over 6,000 jobs in May and at least 300 in June, making a total of over 15,000 jobs eliminated in 2025.
Microsoft has reported strong financial performance, exceeding revenue and profit expectations, despite these reductions. This contrast has generated discussion regarding the reasons for the layoffs, with some analysts arguing that the company is putting efficiency and AI-driven innovation ahead of hiring more people.
Particularly, the Xbox division is anticipated to experience significant layoffs; estimates indicate that up to 2,000 jobs may be impacted.
The possible closure of entire studios has raised concerns among industry insiders, as this move could put additional pressure on Microsoft’s gaming operations. Xbox has been under pressure to increase its profit margins ever since Activision Blizzard was acquired for $69 billion in 2023.
The division’s problems were exacerbated by poor console sales in some markets, like Spain, where the Xbox Series X|S sold only 12,000 units between January and June 2025, compared to 178,000 for the PlayStation 5.
Role of AI in Microsoft’s layoffs
Microsoft’s strategic move towards automation and artificial intelligence aligns with its layoffs. The company has responded to pressure from competitors like Salesforce and Amazon by requiring the use of internal AI tools and incorporating them into employee performance reviews.
In a recent interview, CEO Satya Nadella emphasised AI’s ability to solve practical issues, saying, “AI’s real test lies in fixing real-world issues and not just demos.” Some analysts attribute the workforce reductions to Microsoft’s $80 billion investment in AI infrastructure, which demonstrates this focus on AI.
However, worries about job displacement have been raised by the push for AI. While Microsoft maintains the leave was scheduled to coincide with the fiscal year’s end on June 30, 2025, the timing of the layoffs and Chief Commercial Officer Judson Althoff’s two-month sabbatical has sparked rumours of internal leadership issues.
Waves of layoffs in the tech industry
Layoffs are a part of a larger wave of job losses in the tech industry, so Microsoft is not the only company experiencing this. After 240,000 layoffs in 2024, 147 companies have laid off over 63,000 tech workers in 2025, according to Layoffs.fyi.
Citing operational efficiency and economic uncertainty, companies such as Autodesk, Chegg, and CrowdStrike have also laid off employees. According to Bloomberg, these cuts are being driven by the tech sector’s emphasis on AI as well as adjustments made for overhiring during the pandemic.
There are still concerns regarding how to strike a balance between workforce stability and technological innovation as Microsoft works through this reorganisation. Although the company’s emphasis on AI and operational effectiveness is in line with general industry trends, the extent of these layoffs has come under fire.
Microsoft’s actions, which included the loss of over 15,000 jobs in 2025 alone, indicate a cautious approach to growth in an unpredictable economic environment.