Microsoft to lay off 4% of global staff as profit margins face heat

• Plans to streamline its organisational structure by diminishing managerial layers and refining its product offerings, processes and role assignments.

Microsoft Corporation, a leading technology conglomerate, announced a significant workforce reduction, planning to lay off nearly 4% of its global employee base.

The move emerges as part of the company’s broader strategy to curtail escalating expenses amidst substantial investments aimed at expanding its artificial intelligence (AI) infrastructure.

With a global workforce numbering approximately 228,000 as of June 2024, Microsoft had previously initiated layoffs in May, affecting around 6,000 employees, primarily targeting sales positions.

The company, committed to an ambitious capital expenditure of $80 billion for its fiscal year 2025, faces mounting pressures on its profit margins, particularly as costs surge in scaling AI capabilities, with expectations of a contraction in its cloud margin for the June quarter compared to the prior year.

AI investments

Washington State shows that more than 800 of the positions eliminated will be concentrated in the city of Redmond as well as in Bellevue, another Microsoft hub in its home state.

In addition to workforce reductions, Microsoft intends to streamline its organisational structure by diminishing managerial layers and refining its product offerings, processes, and role assignments.

Reports also highlight that Microsoft’s gaming division, including its Barcelona-based King unit responsible for the popular Candy Crush franchise, will experience staff cuts amounting to approximately 10 per cent or about 200 jobs.

This development aligns with broader industry trends, as other major technology firms, such as Meta Platforms, Alphabet, and Amazon, have implemented similar downsizing measures in response to economic uncertainties, rising operational costs, and the need to optimise organisational efficiency amid rapid technological advancements and investment demands in AI.

Such reductions reflect a strategic recalibration within Corporate America, where companies are actively streamlining operations to mitigate financial pressures and adapt to evolving market dynamics.