Business

IIE DIGITAL DESK : June 19, 2025 — Microsoft is preparing a fresh round of layoffs—this time targeting thousands of employees, with sales teams bearing the brunt of the cuts. The downsizing, expected in early July, follows a major reduction in May and will coincide with the close of Microsoft’s fiscal year.

In May, Microsoft eliminated approximately 6,000 positions, primarily from engineering and product teams, as part of its previous cost-abatement round . Now, with an $80 billion capital expenditure earmarked for data centres and AI infrastructure in fiscal 2025, the company is eyeing its sales divisions and other non-technical roles to free up resources .

Industry reports suggest that more than 1,000 roles will be affected in this upcoming layoff wave, predominantly within global sales units—but the reductions may extend to other departments as well. Microsoft officials have not commented publicly on the matter .

Microsoft’s CEO Satya Nadella emphasized during the May layoffs that headcount reductions reflect a deliberate restructuring, not performance issues. The objective is to reallocate talent toward AI-centric projects and maintain operational efficiency .

This restructuring aligns with a broader corporate trend among tech giants, such as Amazon and Google, to streamline teams and embrace AI-powered automation. U.S. public companies have trimmed approximately 3.5% of their white-collar workforce over three years—driven by the belief that leaner teams deliver better outcomes.

Despite its leaner workforce strategy, Microsoft remains in robust financial health. Its stock recently hit a new all-time high at $480.24, up 14% year-to-date, reinforcing market confidence even as layoffs loom.

Investopedia reports that analysts calculate Microsoft may need to eliminate roughly 10,000 positions per annum amidst persistent AI infrastructure costs to offset depreciation and operating load .

Reports from TechRadar and Hindustan Times highlight Microsoft’s move as part of a wider industry pivot: AI investments are reshaping labor demands, with sales teams particularly scrutinized through outsourcing and automation initiatives .

Microsoft’s in-house decision to outsource sales to third-party vendors for small and mid-sized business segments further signals structural changes in its go-to-market strategy .

Microsoft’s third round of layoffs this year underscores the company’s determination to fine-tune its workforce in support of expansive AI ambitions. While sales teams face immediate pressure, the move reflects a sweeping realignment where automation, infrastructure investment, and AI dominance take precedence over traditional roles.

As the dust settles from these cuts, Microsoft is betting on a leaner but more agile organization capable of sustaining its leadership in the rapidly evolving AI landscape.