Microsoft Could Cut Thousands of Jobs as Early as Next Week

Microsoft plans to announce another round of job cuts as it continues efforts to reduce costs, according to people familiar with the situation.

The layoffs are expected to affect thousands of positions across the company, including roles in sales, consulting and Microsoft’s Xbox gaming division.

Layoff Plans

The latest cuts are expected to affect less than 2.5% of Microsoft’s estimated 220,000-person workforce.

This would make the upcoming round smaller than the job cuts announced by the company last year.

Microsoft could announce the layoffs next week, although the exact timing may still change. Some affected employees are expected to receive offers for other positions immediately.

Microsoft has previously announced workforce reductions around July 1, which marks the beginning of its new fiscal year.

The company eliminated 6,000 positions in May last year. It followed those cuts by removing another 9,000 jobs, representing around 4% of its workforce, in July.

Rising AI Costs

The planned layoffs come as Microsoft tries to control expenses while increasing its spending on artificial intelligence.

The company has also faced pressure from Wall Street over concerns that AI could replace some software services, including products offered by Microsoft.

Microsoft’s stock has fallen by around 19% over the past month, marking its worst monthly performance since the dot-com era.

Retirement Program

Microsoft introduced a voluntary retirement program earlier this year for eligible US employees at Level 67 and below.

Employees qualified when their combined age and years of service reached at least 70. Around 7% of Microsoft’s 125,000 US employees, or nearly 9,000 workers, were eligible for the program. Around one-third of eligible employees accepted the buyout, matching the company’s expectations.

The voluntary departures allowed Microsoft to plan a smaller percentage of compulsory job cuts than it carried out last year. Sales employees receiving commission-based compensation were excluded from the retirement offer.

Xbox Reset

Layoffs at Xbox have been expected since new gaming chief Asha Sharma sent employees a memo outlining a reset of the division.

The memo said Microsoft had started reviewing Xbox’s operations and acknowledged that some changes could be surprising or frustrating for employees.

The expected Xbox cuts will form part of Microsoft’s wider effort to reduce costs and restructure its operations.