Microsoft to cut 3 pc of workforce as part of ‘broad organisational change’

Microsoft is laying off 3 per cent of its global workforce in a new round of job cuts that spans all levels, teams, and geographies of the company.

With a total headcount of 228,000 as of June, the move will affect several thousand employees — over 6,800 — marking the company’s largest workforce reduction since it cut 10,000 roles in 2023, which then was around 5 per cent of its workforce.

Organizational changes

The Redmond giant has explicitly mentioned that these cuts are part of a broader organization-reshaping effort.

While Microsoft has not disclosed specific roles or departments affected, the company emphasized that the cuts are part of a long-term strategy to stay agile and competitive in a fast-moving market increasingly shaped by AI, cloud computing, and evolving customer demands.

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Microsoft’s layoffs come amid a renewed wave of job cuts across the tech industry. Just last week, cybersecurity firm CrowdStrike announced a 5 per cent reduction in staff giving the rapid development of AI and its efficiency, saying that it allows for faster innovation and development. This underscores how even profitable tech giants are optimising headcounts in response to changing business conditions and technological developments.

Sources say laid-off employees will stay on the payroll for 60 days after their termination. Furthermore, the affected staff will also be reportedly eligible for bonuses and rewards.

New performance management

Significant changes in Microsoft's performance management system have also been reported, with the company implementing a two-year rehire ban for employees forced out due to performance issues.

Microsoft has also introduced a "good attrition" metric to track desirable employee departures, mirroring Amazon's controversial "unregretted attrition" system.

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Amazon's system intentionally sheds a certain percentage of employees each year, generally citing underperformance, to maintain a specific level of quality within the workforce. Adopting a version of this system could signal Microsoft's intent to more aggressively manage under-performing staff.

Under the new system, employees facing performance issues must either enter a performance improvement plan (PIP) with "clear expectation and a timeline for improvement" or accept a "Global Voluntary Separation Agreement" with 16 weeks of severance pay.

Financially strong

Despite the cuts, Microsoft remains financially strong. The news comes as Microsoft continues to post strong sales and profits.

In a quarterly earnings report released last month, Microsoft said it made $70.1 billion for the quarter ending March 31, 2025, up 13 per cent from the same period last year.

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The company also reported $25.8 billion in net income for the quarter ending in April, exceeding analyst expectations, and issued an upbeat forecast for the months ahead. But experts issue caution as the world moves towards AI-efficient business, and warn that layoffs may only increase in the upcoming years.