Microsoft Cuts 6,000 Jobs in AI-Focused Restructuring

2025-05-15 digitalcare

Seattle, Thursday, 15 May 2025.
Microsoft has laid off 6,000 employees, including software engineers and AI directors, to realign resources towards significant AI investments amidst rising industry costs.

Scale and Scope of Layoffs

Microsoft’s latest workforce reduction affects approximately 6,000 employees, representing 3% of its global workforce of 228,000 [1][2]. The cuts, announced on May 13, 2025, are particularly significant in the company’s home state of Washington, where 1,985 workers received layoff notices, with software engineering positions comprising over 40% of the affected roles [3][4].

Strategic Shift Towards AI

The restructuring aligns with Microsoft’s substantial AI investments, with the company committing $80 billion to AI initiatives in fiscal year 2025 [5]. CEO Satya Nadella has revealed that AI already generates approximately 30% of the code in Microsoft’s repositories, signaling a fundamental shift in software development practices [5]. The company describes its evolving approach as a ‘distillation factory,’ focusing on developing specialized AI models while streamlining operations [5].

Unexpected Impact on AI Leadership

In a surprising turn of events, even senior AI leadership positions were not spared. Gabriela de Queiroz, Microsoft’s Director of AI for Startups, was among those affected by the cuts [6]. Her departure has sparked discussions across the tech industry about job security in AI-focused roles, particularly given Microsoft’s public commitment to artificial intelligence leadership [6].

Future Implications

Financial analysts suggest this may not be the last round of workforce adjustments. According to analyst Gil Luria, Microsoft might need to reduce headcount by at least 10,000 employees annually to offset capital investment depreciation [5]. Despite these challenges, Microsoft’s financial performance remains strong, with quarterly revenues reaching $70.07 billion [5], though the company faces the complex task of balancing technological innovation with operational efficiency.

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Microsoft layoffs