Microsoft is cutting around 7,000 jobs, or 3% of its workforce.
This move is not about poor performance or poor revenue. It is a clear change in strategy. The strategic layer, more engineers, more investment in artificial intelligence.
Layoffs affect departments and global office staff. However, most of them are middle managers and non-technical roles, patterns that appear throughout technology. Message: Reduce overhead, speed up product cycles, and create room for greater AI spending.
Numbers behind the shift
Microsoft closed its latest quarter with revenue of $707 billion. This has estimated Wall Street, showing strong business health, and the company plans to spend up to $80 billion this fiscal year. It is primarily designed in data centers designed for training and operation of AI models.
This is a huge leap in infrastructure spending, but it also explains why Microsoft is trimming elsewhere.
AI models require a lot of calculations, so a new type of hardware is required. Storage, cooling and power needs to be expanded. Building that capacity will result in less money, time and internal delays, and Microsoft appears to be cutting back on what will slow down pushes.
Fire Line Management
Most cuts clash with the middle manager and support staff. These are useful roles for coordination, review and reporting, but do not write code or design systems directly. These positions have long supported the functioning of large companies, but are now considered blockers of rapid action.
I told the source Business Insider Microsoft wants a high ratio of technical staff to managers. This not only saves costs, but also reduces the number of people between engineers and final decisions.
Analyst Rishi Jallia said Financial Times High-tech giants like Microsoft have “too many layers.” He said companies are trying to remove bureaucracy while chasing AI leadership.
Microsoft has not publicly broken down which departments were most affected. However, reports suggest that Microsoft’s subsidiary LinkedIn has cut jobs as part of this broad shift.
In line with broader industry trends
With Amazon, Google and Meta doing the same, Microsoft is not just about managing management. They’re removing layers and bringing more decisions closer to what they build their products.
For Microsoft, changes occur after several rounds of several cuts. In early 2024, the company fired about 2,000 workers with performance-based trim. This new wave is different as it targets structure rather than staff output.
$80 billion in AI infrastructure
With Microsoft’s investment plans, AI is at the heart of growth. According to Reutersthe company hopes to spend up to $80 billion in fiscal year 2025, much of which is directed towards AI-enabled data centers.
These centers feature large language models, natural language tools, and enterprise AI systems. Without them, even the best models would not be run at a large scale.
The company’s move shows just how serious it is about owning an AI backbone. This is more than just software updates, it concerns tight control over how physical hardware, cloud capacity, and AI is built and used.
Microsoft’s early partnership with OpenAI gave a jump start, but Google, Meta, Amazon and Apple are all in a big AI move. Microsoft appears to bet that FirstMovers’ advantage is just as strong as the infrastructure behind it.
Employee responses reflect mixed emotions
Like most layoffs, employees react differently. Some posts on social media reflect understanding, while others express concerns about job security and team stability.
Several former employers described the mood as “tensty but hopeful.” Many said they had been preparing for the change since Microsoft’s performance cuts in 2024.
Some people worry that focusing too much on AI will weaken the role of support, while others think cutting managers are not clear and cause confusion.
Yet, public sentiment shows that there is growing acceptance that AI is changing the way jobs look, even in large corporations.
What does this mean for the industry?
Microsoft reorganization sets the tone. Strong revenues no longer guarantee job security, and AI growth is currently driving the ORG charts.
Middle managers are no longer safe, and non-technical roles need to prove their direct value to AI goals. Even product teams can face more pressure to automate or streamline. For employees, the message is clear. Learn how AI fits into your job or the risks being reduced from your plan.
For other tech companies, Microsoft’s strategy may act as a roadmap. Spending more on AI means less money elsewhere. And many companies may chase their playbooks to stay competitive.
Long-term questions remain
The short-term logic is clear. Microsoft is cutting back on its structure to fund AI growth. But over time, businesses need to balance innovation with internal support.
Removing the interim manager can speed up some work, but it can also reduce mentorship, training and context.
AI may require more data and calculations. But people still build tools, ask the right questions and set goals. How companies treat these people will shape how well they compete later.
(Photo by Ron Lach)
See: The Amazing Rise of AI-powered Scams: Microsoft reveals $4 billion in thwarting fraud
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