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Microsoft layoffs 2025: 7,000 jobs to be cut globally as tech giant shifts focus to AI

New Delhi: Microsoft is cutting around 7,000 jobs across departments and geographies, marking its biggest workforce reduction since 2023. The layoffs, which affect roughly 3% of the company’s global headcount, come as the tech giant sharpens focus on artificial intelligence and attempts to streamline its operations.

While there is no official press release, or SEC filing, a Microsoft spokesperson confirmed to CNBC about 3% layoffs. Despite posting strong earnings in its most recent quarter, including robust growth in its cloud services business Azure, Microsoft is making internal changes aimed at reallocating resources. The company is reportedly restructuring management layers and adjusting performance review systems as it prepares for the next phase of AI-led growth.

Cuts hit multiple teams as Microsoft trims management layers

The layoffs are not limited to a single department and are said to impact roles across levels and regions. Unlike earlier cuts this year that were tied to performance, these changes are part of a broader operational overhaul. One of the main goals appears to be flattening the organization by reducing the number of management layers, giving team leaders more direct oversight and quicker decision-making.

With around 2.28 lakh employees worldwide, the current reduction affects a significant portion of Microsoft’s talent pool. The last major layoff was in 2023 when the company cut 10,000 jobs as the global tech industry faced a wave of cost-cutting.

AI investment drives change

Microsoft has been investing heavily in artificial intelligence, with its partnership with OpenAI and integration of AI features into products like Microsoft 365 and Azure. The company is shifting budget and talent towards AI, cloud services, and products that are seen as critical to its future roadmap.

Even with strong growth figures and surging investor confidence, the company’s leadership is taking a cautious approach to scale, ensuring the workforce is aligned with long-term priorities.

Performance policies tighten up

Microsoft is also overhauling how it evaluates employee performance. New policies include a two-year rehiring block for those let go due to performance issues and stricter internal improvement plans. These changes reflect a growing push to maintain high standards while operating with a leaner workforce.

Calm surface, busy underneath

From the outside, Microsoft appears to be thriving. But internally, it’s going through a quiet reset. The recent layoffs and structural shifts are part of a bigger rebalancing act, ensuring the company stays competitive and ready for a future where AI and automation are front and center.