INTERNATIONAL: Microsoft is cutting about 6,000 jobs worldwide as it ramps up spending on artificial intelligence (AI). Malay Mail reported, citing Bloomberg, that the job cuts involve less than 3% of the company’s global workforce of 228,000 employees and will affect staff across different departments and countries, including those at LinkedIn.
Around 2,000 of the affected jobs will be at the company’s headquarters in Redmond, Washington, where layoffs will start on July 13.
This is one of Microsoft’s biggest rounds of job cuts since early 2023, when the company let go of 10,000 employees.
When asked about the layoffs in the city-state, a Microsoft spokesperson told Channel News Asia (CNA), “We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace,” but did not provide a breakdown of the numbers.
CNA reported that the move came just weeks after Microsoft reported stronger-than-expected earnings, driven by strong performance in its Azure cloud business.
However, the push to expand its AI infrastructure has started to affect profits. In the March quarter, Microsoft Cloud’s profit margin fell to 69%, down from 72% the year before.
The company has set aside around US$80 billion in capital spending for this financial year, mainly to expand data centres to support AI growth.
DA Davidson analyst Gil Luria said the job cuts only show Microsoft is keeping a close eye on the margin pressure from its large AI investments.
He added that if the company continues to spend at this pace, it may need to cut about 10,000 jobs each year to balance out the higher depreciation levels from its capital expenditures.
Other big tech firms have made similar moves. Last year, Google laid off hundreds of workers as it continues to focus on AI.
In February, Business Insider reported that Google employees had been tracking the company’s job cuts through an internal Google document as the company continued to lay off workers across several of its units. /TISG