Microsoft cuts thousands of jobs to focus on AI and key growth

An unexpected turn in an era of accelerated innovation. In a move that shook the tech industry, Microsoft announced a massive staff reduction affecting nearly 9,000 employees across different regions. This decision represents less than 4% of its global workforce but marks its most drastic cuts since 2022.

The restructuring touches on sensitive areas such as Xbox, sales, product management, and software engineering , and is part of a broader company strategy: prioritizing artificial intelligence, the cloud, and organizational agility , even if that means leaving behind legacy teams.

The layoffs began with notices sent to employees at Xbox and its video game division , a significant blow to a brand that, just a year ago, completed its $75.4 billion acquisition of Activision Blizzard . This strategic move was intended to strengthen its competition against Sony and its PlayStation, but now Microsoft is reconsidering its structure to avoid duplication.

Xbox CEO Phil Spencer explained in a memo that this restructuring seeks “lasting success” and aligns with the need to focus solely on “strategic growth areas.”

One of the most controversial points of this wave of layoffs is the departure of hundreds of software engineers and product managers , especially at key locations like Redmond, Washington, and San Francisco . While Microsoft justifies the cuts as part of a strategy to eliminate "layers of management," recent statements by Satya Nadella raise even deeper questions.

The CEO acknowledged that up to 30% of the code for some projects is already software-generated , a claim that, combined with developer layoffs, fuels the debate about the impact of AI on tech jobs .

Amy Hood , Chief Financial Officer, was clear in her vision: Microsoft's future lies in building high-performance teams, reducing hierarchical layers, and increasing agility . In her words, it's about "investing with purpose," a phrase that translates to resources allocated to artificial intelligence, cloud services, and automation , even if it means abandoning less profitable projects.

While the cuts are causing uncertainty in thousands of households, the financial market is responding enthusiastically. Dan Ives , an analyst at Wedbush Securities, sums it up this way:

"Nadella is fine-tuning the structure to sustain growth in AI. This is about efficiency, not crisis."

But beyond Wall Street, the news leaves a bittersweet taste: can a company continue to grow while constantly reducing its workforce?

Microsoft is no stranger to these kinds of measures. In May 2024 , it laid off 6,000 workers, followed by another 300 in June and nearly 2,000 more in May in Washington state alone . With the new cuts in July, the cumulative number of layoffs in just over a year exceeds 17,000 employees .

And while some of those cuts were offset by new hires in AI and cybersecurity, the overall trend is clear: Microsoft is looking to do more with less .