This move comes as the group continues to spend billions of dollars on artificial intelligence (AI) projects. This is considered the company's biggest layoff since 2023, when 10,000 employees were laid off.
The cut is happening at all levels and in all regions, reflecting efforts to control costs while maintaining strong investment in technology infrastructure. Although just a few weeks ago, Microsoft announced business results beyond expectations with a strong growth in Azure cloud computing, the company still faces increasing pressure on profits due to increased spending on AI infrastructure.
The gloom surrounded the group when Mr. Scott Hanselman - Vice President of Microsoft - expressed: "This is the first time I have had to fire someone for business goals that are not mine... I love them and hope they are fine".
Microsoft Cloud's profit margin in the last quarter decreased to 69%, lower than the 72% in the same period last year. In this fiscal year, the group plans to invest about $80 billion - mostly to expand data centers, to meet the growing demand for AI-related services.
We are continuing to strategically adjust the organization, to put the company in the best competitive position in a constantly fluctuating market, a Microsoft spokesperson shared. Along with Microsoft, many other large technology companies such as Google have also made personnel cuts over the past year to maintain profit margins when investing in AI.
According to analyst Gil Luria from DA Davidson Law Firm, Microsoft's dismissal of thousands of employees shows that they are tightly controlling costs in the context of increasingly expensive infrastructure investment. He predicted that Microsoft could have to cut at least 10,000 more employees per year if it continues to maintain its current investment level.
As of June 2024, Microsoft has about 228,000 employees and is still regularly adjusting personnel to prioritize resources for key areas such as AI. In the AI wave spreading throughout the technology industry, restructuring human resources is considered an inevitable step to maintain a competitive advantage.
