Microsoft will reduce its global workforce size by 3% despite its strong performance in the latest quarter.
Microsoft employs about 230,000 people around the world. The reduction in headcount may affect 6,000 positions, although the company hasn’t specified the exact numbers. Microsoft employs more than half its staff in the US.
Microsoft has said that the redundancies would be at all levels, regardless of geography. However, Microsoft will concentrate on reducing management. Yesterday, notices were sent to all employees.
Microsoft stated in a press release that it continues to make the necessary organisational changes to position itself for success on a dynamic market.
Microsoft announced the last global job cuts of this magnitude in January 2023. At that time, it was one of many tech companies who had laid off 10,000 employees.
Recent tech companies have invested heavily in AI. Gil Luria of DA Davidson Companies’ technology research said that the job cuts were proof that Microsoft is “very closely” controlling the pressures on its profit margins caused by its increased AI investment.
He told Reuters that if Microsoft continues to invest at its current level, they would have to reduce their headcount by 10,000 to compensate for the increased depreciation due to capital expenditures.
Microsoft released its third quarter results last month. Revenues increased 13%, to $70.1bn. Net income grew 18%, to $25.8bn. Microsoft said that its Cloud and AI initiatives were responsible for the impressive results.
CrowdStrike, a cybersecurity software company, announced plans last week to reduce its workforce by 5%.
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