Microsoft is continuing its trend of workforce reductions, with hundreds more employees affected after significant job cuts last month. This latest move follows a reduction of 6,000 positions in May 2025, signaling ongoing organizational changes aimed at positioning the company for success in a dynamic marketplace. While the company hasn't specified which roles were targeted in this most recent round, these cuts are part of a broader restructuring effort as Microsoft invests heavily in artificial intelligence (AI) infrastructure.
News of the additional layoffs surfaced via a Washington state notice reviewed by Bloomberg, revealing that over 300 employees were informed their positions were eliminated. A Microsoft spokesperson confirmed that these cuts are in addition to the 6,000 job cuts announced the previous month. The company maintains that these adjustments are necessary to remain competitive. According to Microsoft, these layoffs impact less than 1% of the company's total headcount.
These workforce reductions coincide with Microsoft's significant investment in AI, mirroring efficiency initiatives across the tech industry. CEO Satya Nadella addressed the earlier cuts at an internal town hall, describing them as a "realignment" rather than performance-based decisions. He stated that the changes were about "repositioning for what comes next," alluding to the company's AI transformation. Microsoft's capital expenditures have surged, with a significant portion directed towards building data centers essential for running AI systems.
Data from the Washington state Employment Security Department indicates that software engineers were heavily impacted in the recent layoffs. Roles in product management, technical program management, product marketing, and legal were also affected. This data aligns with trends observed in the previous month's layoffs, suggesting that software engineering roles are not immune to the impact of generative AI tools, which are increasingly influencing coding practices. Nadella revealed that AI generates approximately 30% of the code in some Microsoft projects.
The layoffs are not isolated to Microsoft. Other major tech companies, including Amazon, Google, and Salesforce, are also reducing management roles and streamlining their operations. This industry-wide trend reflects a shift towards flatter organizational structures and increased reliance on engineers and AI tools to enhance efficiency and reduce costs.
Microsoft's actions are part of a third round of layoffs in 2025. In addition to the recent cuts and the reduction in May, the company also dismissed staff in January. In 2023, Microsoft laid off 10,000 employees. These ongoing workforce adjustments reflect a broader strategy to optimize resources and prioritize emerging technologies like AI.
A Microsoft spokesperson stated, "We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace.” The company also pointed out that it regularly adjusts its workforce and is trying to streamline processes by reducing management layers.
The latest round of cuts in Washington state impacted a mix of individual contributors and management levels. "IC4" roles, or mid-level individual contributors, were the most affected. New data shows that the latest cuts also impacted legal counsel and paralegal positions in Washington state, roles that were not impacted in the layoffs last month.
Microsoft's moves come as the tech industry grapples with the implications of AI. While companies are investing heavily in AI development, they are also looking for ways to streamline operations and reduce costs in other areas. The rise of AI-assisted coding tools and automation is impacting various roles, including software engineering, as companies seek to leverage these technologies to improve efficiency.
