The layoffs target middle management and non-coding roles, aiming to flatten organizational hierarchies and increase efficiency.
On May 14, 2025, Microsoft announced a major workforce reduction, laying off around 6,800 employees — approximately 3% of its global staff. The tech giant stated that this decision is part of a broader strategy to streamline operations and increase its focus on artificial intelligence (AI) development.
Why Is Microsoft Laying Off Employees?
Despite reporting strong quarterly revenues of $70.07 billion, Microsoft is reallocating resources to boost its AI capabilities. The company plans to invest up to $80 billion in AI infrastructure in fiscal year 2025, aiming to compete with industry leaders like Google, Meta, and Elon Musk‘s xAI.
The layoffs target middle management and non-coding roles, aiming to flatten organizational hierarchies and increase efficiency. By reducing management layers, Microsoft seeks to enhance decision-making speed and empower engineering teams.
Who Is Affected?
The job cuts span various departments, including LinkedIn, sales, gaming, and security. Notably, even high-ranking positions are impacted; Gabriela de Queiroz, Director of AI at Microsoft, disclosed her layoff on social media.
In addition to these structural changes, Microsoft is enforcing stricter performance evaluations. Employees not meeting performance standards face immediate termination without severance pay or continued benefits. This approach underscores Microsoft’s commitment to maintaining a high-performance culture.
Impact on India
Microsoft’s India operations remain unaffected by these layoffs. Puneet Chandok, President of Microsoft India and South Asia, confirmed that no job cuts are planned in the region. Instead, Microsoft is investing $3 billion to expand its cloud and AI infrastructure in India over the next two years. This investment includes initiatives to train 10 million people in AI skills by 2030, in collaboration with India’s Ministry of Electronics and Information Technology.
Support for Affected Employees
Microsoft is offering severance packages and access to job placement programs for those laid off. Additionally, the company provides upskilling opportunities in high-demand areas like AI and cybersecurity, helping former employees transition to new roles in the evolving tech landscape.
Microsoft’s restructuring aligns with a broader trend in the tech industry, where companies like Amazon and Google are also reducing management layers to enhance agility and focus on emerging technologies. These strategic shifts reflect the industry’s adaptation to rapid technological advancements and changing market demands.
