Microsoft layoffs

 

What Happened

• Date & Scale: On July 2, 2025, Microsoft announced the layoff of approximately 9,000 employees, representing about 4% of its ~228,000 global workforce.

• Cumulative Cuts: This marks the third major round of job reductions in 2025. Earlier rounds included:

  • ~6,000 jobs in May

  • ~300 positions in June

Why the Layoffs

• AI Investment Pressure: Heavy spending on AI infrastructure—Microsoft allocated $80 billion in capital expenditures for FY25—has tightened margins.

• Structural Efficiency: The company aims to streamline operations, flatten hierarchical layers, and reduce management overlap.

Who's Affected

• Sales & Marketing: Heavily impacted by the July round.

• Gaming Division: Significant cuts in Xbox and related studios—including King (Candy Crush), Raven Software, ZeniMax, and Rare Studios. Notable game cancellations include Everwild and the Perfect Dark reboot; even Xbox’s Santa Monica-based Initiative studio was closed.

• Engineering, Product & Legal: Earlier waves (May–June) affected roles in software engineering, product management, program management, and legal teams.

Financial Context

• Despite restructuring, Microsoft’s Q3 FY25 results remain strong:

  • Revenue: ~$70 billion

  • Net Income: ~$26 billion

• However, escalating infrastructure costs, particularly related to AI, continue to press margins.

Implications

• This is part of a broader tech industry trend, with over 100,000 jobs cut across major tech firms in 2025.

• Within Microsoft, AI automation (e.g., “30% of code is now AI-generated”) is reshaping workforce needs.

• Employees are receiving severance packages (e.g., 12 weeks' salary + 2 weeks/year of service), though specifics vary by region/team.