Microsoft Tightens Its Belt, Cuts 9,000 Jobs
"Reducing Non-AI Workforce to Increase Investment"
US Tech Companies Lay Off 63,000 This Year Alone

Microsoft (MS), which has been investing heavily in artificial intelligence (AI), has launched its third large-scale restructuring in recent months. The layoffs affect about 4% of its global workforce, or 9,000 employees. This comes after the company cut about 6,000 jobs in May, bringing the total number of layoffs in just two months to 15,000. The move is intended to increase efficiency through AI and redirect saved labor costs toward building AI infrastructure, reflecting the broader trend across the US tech industry of AI increasingly replacing human jobs.

MS Accelerates AI Transition with More Layoffs

On July 2 (local time), Microsoft announced via a spokesperson's statement that it would cut about 9,000 jobs across various divisions worldwide. The figure accounts for about 4% of Microsoft’s total workforce of 228,000 as of last year and marks the largest round of layoffs since 10,000 jobs were cut in 2023. The company stated, “We are restructuring our organization to succeed in a rapidly changing market environment,” adding, “We are reducing layers of management and leveraging new technologies to enhance employee productivity.” The statement continued, “We will continue to make the necessary organizational changes to ensure our company and teams succeed in this dynamic market.”

The layoffs are viewed as an extension of Microsoft’s strategy to enhance work efficiency through AI. CEO Satya Nadella declared at the Microsoft Build 2025 annual developer conference held in Seattle on May 19 that “the era of the Open Agentic Web has arrived,” indicating that AI agents will be integrated across individuals, organizations, and industries.

The Xbox division is reportedly among those affected. Xbox Gaming CEO Phil Spencer stated in an email to employees that “to drive sustainable success in our gaming business and focus on strategic growth areas, we will end or scale down specific operations,” adding that “we will follow Microsoft’s lead in eliminating middle management roles to boost agility and efficiency.”

As a result of Microsoft’s decision, major Xbox studio projects have been canceled. The highly anticipated title “Perfect Dark” has been scrapped, and the studio behind it, The Initiative, has been shut down. Additionally, development of Rare’s 2019-announced game “Everwild” has been officially halted. Turn 10 Studios, the developer behind “Forza Motorsport,” has also been hit, cutting over 70 staff members.

“Coding Is What AI Does Best”—Developers Are Microsoft’s Top Layoff Target

This marks Microsoft’s third major round of layoffs this year alone. In January, the company laid off about 1% of its workforce, targeting underperformers, followed by a reduction of more than 6,000 employees in May. Total layoffs since January now exceed 15,000, approaching the company’s largest restructuring in 2014, which cut about 18,000 jobs.

Developers have been the biggest casualties in Microsoft’s layoffs. With AI-powered coding and analysis tools becoming widespread, much of the traditional software developer role has been automated. In April, Nadella remarked at Meta’s AI developer conference LlamaCon that “20–30% of the code within the company is already generated by AI,” suggesting that AI is increasingly capable of replacing human tasks.

Indeed, Microsoft’s new coding AI agent, GitHub Copilot, can generate code with just a few developer instructions. Earlier versions of Microsoft’s coding AI tools generated code based on developers’ ongoing tasks, but with the release of GitHub Copilot, developers have shifted from writing code themselves to directing AI. Product management and technical program management roles have also been significantly affected, accounting for about 600 people, or 30% of total layoffs. By contrast, departments that deal directly with customers have seen less impact.

Big Tech Faces Layoff 'Rush'

The layoff wave is not limited to Microsoft but is spreading across the tech industry. Global Big Tech firms are conducting mass layoffs while making massive investments in AI, leading to budget restructuring and cost realignment. Amazon recently cut around 100 jobs in its Devices and Services division. According to Reuters, the cuts include units working on Kindle, Echo Speaker, Alexa voice assistant, and the Zoox autonomous vehicle project. Since early 2022, Amazon has laid off around 27,000 employees.

Intel announced in April plans to cut up to 22,000 employees, or about 20% of its workforce. The company also laid off 15,000 employees in August last year, around 15% of its total staff at the time. Meta laid off about 3,600 employees (5% of its workforce) in February, and in April cut several hundred jobs from its Reality Labs division. Salesforce also announced in early 2025 plans to lay off more than 1,000 employees while focusing on AI-based sales roles. Workday announced restructuring in February, emphasizing hiring strategic AI talent.

Google, after cutting 12,000 jobs (6% of its workforce) in 2023—its largest layoff to date—and reducing 10% of its managerial staff last December, has continued to conduct monthly layoffs by division. In February, about 100 jobs were cut in the cloud division; in April, several hundred were laid off from the platforms and devices division (Android, Chrome, Pixel, etc.); and in May, around 200 were cut from the global business division (sales and partnerships). Last month, voluntary retirement programs were introduced in core departments including search, ads, research, engineering, and knowledge & information (K&I), which alone houses around 20,000 employees.

According to the layoff tracking site Layoffs.fyi, 150 US IT companies have implemented layoffs in the first half of this year, cutting a total of 63,823 jobs. This accounts for nearly 1% of the entire US IT workforce and is equivalent to 24% of Samsung Electronics’ global workforce of 250,000. Last year, 152,922 jobs were lost across 549 tech companies worldwide.