Microsoft has announced a significant layoff affecting around 9,000 employees, marking its second large-scale job cut within months and the most substantial reduction in over two years. The tech giant, which comprises various departments including the Xbox gaming division, began notifying impacted employees earlier today. Among those who will lose their positions, approximately 830 are associated with the company’s main headquarters located in Redmond, Washington.
While Microsoft has yet to disclose the number of Australian workers affected by this decision, a spokesperson stated that the company remains focused on implementing necessary organisational changes to enhance its performance in a rapidly evolving market. The layoffs will impact various global teams, particularly within the sales division, as part of these strategic shifts. Although the total count of affected employees has not been fully revealed, Microsoft mentioned that this reduction represents about 4% of its workforce from the previous year.
Phil Spencer, CEO of Xbox, addressed the layoffs in a memo, emphasising that the adjustments are intended to ensure the gaming division is well-positioned for sustainable success and to concentrate on key growth areas. Spencer indicated that Xbox would follow the broader trend at Microsoft, which includes streamlining management to increase operational efficiency.
Microsoft reported employing approximately 228,000 full-time staff as of June 2024, which highlights that the current cuts will account for nearly 4% of that number. This latest round of layoffs follows other significant job reductions earlier this year, notably in May when roughly 6,000 workers, representing nearly 3% of the global workforce, were laid off.
The ongoing job cuts occur alongside Microsoft’s substantial investments in data centres, specialised computing chips, and other vital infrastructures in pursuit of advancing its artificial intelligence capabilities, which are projected to cost the company around $80 billion in the previous fiscal year. The new fiscal year began recently, and last month, Microsoft had already trimmed an additional 300 jobs from its Redmond base.
These employment reductions have raised concerns about how they may correlate with the efficiency of organisational functions, especially pertaining to software engineering roles, given that CEO Satya Nadella indicated a growing reliance on AI to automate coding tasks.
Analysts suggest that the recent layoffs are mainly concentrated in areas of slower growth within the company, particularly in relation to Xbox and other established sectors. Dan Ives from Wedbush Securities noted that the focus appears increasingly on AI, cloud computing, and future innovations, implying that the cuts reflect a strategic pivot by Microsoft to maintain efficiency in response to market expectations.
Despite this streamlining, the company has made significant investments in its gaming operations, including the recent $75.4 billion acquisition of Activision Blizzard, aimed at bolstering its competitive stance against rivals like Sony. Following this expansion, many employees from the acquired studios have expressed difficulties due to the recent layoffs and are actively seeking new employment opportunities.