Microsoft cuts jobs again as AI costs climb, to let go of about 9,000 employees

Microsoft will be cutting nearly 4% of its global workforce, or about 9,000 of its 228,000 employees worldwide, the company said on Wednesday (July 2), citing ongoing efforts to manage costs amid heavy spending on artificial intelligence infrastructure.

This is the second round of layoffs in recent months. In May, the company also announced it would let go of 6,000 workers for the same reason.

According to Reuters, which cited Bloomberg’s news report last month, the company was planning to cut thousands of jobs, mainly in its sales department.

The company had committed US$80 billion (S$101.72 billion) in capital spending for its 2025 financial year. However, the rising costs of scaling up its AI infrastructure have started to weigh on its profit margins, with its cloud margin for the June quarter expected to dip compared to the same period last year.

Microsoft said on Wednesday it plans to reduce the number of management layers, with fewer managers, and streamline its products, internal procedures, and roles across the company. The layoffs were first reported by The Seattle Times on Wednesday.

On Wednesday evening, Microsoft told Channel News Asia (CNA) that it would continue implementing the organisational changes necessary to “best position the company for success in a dynamic marketplace.”

Just this week, Business Insider reported, citing two sources familiar with the matter, that some teams in the company may add AI usage metrics to evaluate employee performance.

Developer Division president Julia Liuson reportedly told employees in an internal email that “using AI is no longer optional” given that “AI is now a fundamental part of how we work”.

India Today reported that while the company has heavily promoted Copilot, Microsoft’s AI companion, adoption within the company’s workforce has remained lower than expected. It also reported possible layoffs in the company’s Xbox division as early as next week.

According to Reuters, which cited Bloomberg’s report on Microsoft’s gaming unit, the company’s King division in Barcelona is cutting about 10% of its staff, or around 200 employees. This was confirmed by Microsoft, although no further details were provided.

Other major tech firms are making similar moves. In February, Meta announced it will cut off the company’s “low performers,” about 5% of the company’s workforce, to stay ahead in the AI race. The same goes for Google, under Alphabet, and Amazon, which have also cut jobs. /TISG

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