Microsoft Announces 9000 Job Cuts as Artificial Intelligence Reshapes Operations

The tech behemoth Microsoft has unveiled plans to reduce its global workforce by approximately 9,000 positions, representing 4% of its staff, as the organisation pivots towards enhanced artificial intelligence capabilities whilst streamlining operational costs.

The redundancies will impact various departments worldwide, with significant effects on the sales division and the company’s Xbox gaming segment. This development follows a previous reduction of 6,000 roles in May, which primarily affected product and engineering positions.

Phil Spencer, Xbox’s chief executive, communicated to staff that the restructuring would “position the video game business for enduring success” whilst implementing a flatter management structure to boost organisational agility. The company’s total workforce stood at 228,000 at the close of June 2024, including 5,300 UK-based employees.

The strategic shift reflects Microsoft’s substantial £80 billion capital expenditure commitment for the 2025 fiscal year, with a particular emphasis on AI infrastructure development. However, the mounting costs associated with scaling AI capabilities have impacted profit margins, notably affecting the company’s Azure cloud services division.

Industry analyst Dan Ives from Wedbush Securities suggests these cuts target “legacy areas” of the business, noting that Microsoft’s previous recruitment might have been excessive. The move aligns with CEO Satya Nadella’s earlier revelation that AI now generates “20 to 30 per cent of code” in certain Microsoft projects.

The restructuring mirrors similar efficiency-driven changes across the tech sector, with Meta Platforms, Google, and Amazon all implementing significant workforce reductions in recent months. Microsoft has also begun incorporating AI utilisation metrics into employee performance evaluations, signalling a fundamental shift in how the company values technical competency.