Microsoft is gearing up for another round of job reductions, according to sources familiar with the company’s plans. This wave of layoffs is part of a broader strategy aimed at optimizing workforce performance and aligning resources with the company’s strategic objectives. The focus will be on trimming underperforming employees, a move that highlights Microsoft’s commitment to maintaining operational efficiency across its organization.
Reports indicate that the upcoming layoffs will primarily target individuals deemed underperforming. Though the exact number hasn’t been disclosed, the cuts are expected to affect several departments, including the Security division, which has been under scrutiny. This marks the continuation of Microsoft’s aggressive workforce restructuring, following significant job cuts in previous years.
Since early 2023, Microsoft has been intermittently reducing its headcount, starting with 10,000 layoffs in January 2023—about 5% of its workforce at the time. Smaller, more targeted layoffs have continued throughout 2023 and 2024, impacting various units, products, and divisions. Notably, some cuts have also hit the Xbox division after Microsoft’s $69 billion acquisition of Activision Blizzard.
One concerning aspect is the scale and focus of these layoffs. The company’s performance evaluations are reportedly rigorous, even affecting some senior staff. This drive to cut underperformers underscores Microsoft’s relentless pursuit of maintaining a lean, high-performing workforce. Despite these reductions, the company has indicated that roles vacated through performance-based exits are often replaced by new hires, signaling that Microsoft’s global headcount may not see drastic changes.
The connection between these layoffs and broader economic shifts is unmistakable. The tech industry has been grappling with mass layoffs since 2022, with approximately 151,484 employees laid off across 542 tech companies in 2024 alone. This trend is expected to continue into 2025, as companies shift their focus from high-volume hiring to recruiting for quality, particularly in areas like AI and full-stack engineering. AI-driven hiring priorities are reshaping the demand for tech talent, further fueling workforce adjustments.
The industry’s response to these layoffs has been mixed. Some experts predict that the US tech sector will rebound in 2025, while others believe that Microsoft’s shift toward performance-based cuts could create a more competitive and high-pressure work environment. This latest round of layoffs reflects a continuation of CEO Satya Nadella’s approach to workforce management since his appointment in 2014. Under Nadella, Microsoft has seen multiple rounds of restructuring, including the significant cut that year, which saw 18,000 employees—about 14% of the workforce—let go.
As Microsoft moves forward with these layoffs, the ripple effects on employees, teams, and the broader tech landscape will be keenly felt, raising questions about the long-term stability and future of tech employment.
Sources:
https://www.newsbytesapp.com/news/business/microsoft-to-layoff-underperforming-employees/story
https://mspoweruser.com/microsoft-layoffs-2025-redmond-plans-more-job-cuts-this-year/
https://www.entrepreneur.com/business-news/microsoft-is-about-to-begin-job-cuts-heres-why/485283
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