Microsoft to cut nearly 3% of global workforce amid AI investment pressures

Microsoft is laying off approximately 6,000 employees worldwide — nearly 3% of its global workforce — in its largest round of job cuts since early 2023.

The move comes as the $3.3 trillion tech giant seeks to manage the growing financial pressure from its aggressive investment in artificial intelligence infrastructure, despite delivering strong quarterly results and robust growth in its cloud computing division, Azure.

The layoffs will affect staff across multiple areas of the business, including LinkedIn and Xbox, as the company undergoes what it described as “organisational changes necessary to best position the company for success in a dynamic marketplace.”

Microsoft last reported a global headcount of 228,000 full-time employees in June 2023, with around 55% based in the United States. The current round of job losses, although not officially quantified by the company, is expected to impact around 6,000 roles globally.

This marks the largest restructuring since Microsoft cut 10,000 positions — nearly 5% of its workforce — in early 2023, when the tech sector broadly pulled back after rapid hiring during the pandemic-era boom.

While Microsoft’s latest financial results exceeded market expectations — driven by strong performance in its Azure cloud division — the company has been grappling with narrowing margins. Microsoft Cloud’s profitability dipped to 69% in the quarter ending March, down from 72% a year earlier, a decline attributed to rising infrastructure costs linked to artificial intelligence deployments.

The company has earmarked a record $80 billion in capital expenditure for the current financial year, much of it directed at expanding data centres to support AI applications and address capacity bottlenecks.

Analysts say the job cuts reflect Microsoft’s attempt to tightly manage its bottom line during this investment-heavy period. Gil Luria, an analyst at DA Davidson, said: “We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 in order to make up for the higher depreciation levels due to their capital expenditures.”

Despite the job losses, Microsoft remains one of the most strategically important players in the global tech landscape. Under CEO Satya Nadella, the company has positioned itself at the forefront of AI, with significant investments in OpenAI, the maker of ChatGPT, and tight integration of generative AI tools across its software ecosystem.

Founded in 1975 by Bill Gates and Paul Allen, Microsoft has evolved into a cloud-first, AI-powered technology leader. But as competition intensifies and infrastructure costs soar, the company now faces the challenge of sustaining innovation while keeping margins under control — and it’s clear that managing workforce numbers is a key part of that balancing act.

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Microsoft to cut nearly 3% of global workforce amid AI investment pressures