Major Restructuring Underway as Microsoft Begins New Fiscal Year
In a move that underscores ongoing shifts in the tech industry, Microsoft has confirmed plans to lay off approximately 9,000 employees—impacting less than 4% of its global workforce. The decision, announced at the start of the company’s 2026 fiscal year, is part of a broader strategy to adapt to an increasingly dynamic and competitive market.
Why Is Microsoft Downsizing Again?
The layoffs span multiple departments, locations, and levels of seniority, reflecting what insiders describe as a significant organizational restructuring. According to a company spokesperson, Microsoft is focused on aligning teams for long-term success and increasing agility across its vast operations.
“We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” a Microsoft spokesperson said.
This isn’t the first round of job cuts in 2025. Earlier this year:
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January: Microsoft trimmed less than 1% of its staff due to performance reviews.
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May: Over 6,000 roles were eliminated.
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June: Another 300 jobs were slashed.
As of mid-2024, Microsoft employed about 228,000 people globally. For comparison, in 2023, the company laid off 10,000 employees, and back in 2014, the tech giant cut 18,000 roles following its acquisition of Nokia’s mobile division.
What’s Driving These Changes?
Sources close to the matter reveal that Microsoft is actively working to flatten its management structure, especially within key divisions like Gaming. The aim? To improve communication, reduce bureaucracy, and accelerate decision-making across teams.
“To position Gaming for enduring success… we will end or decrease work in certain areas and remove layers of management,” wrote Phil Spencer, CEO of Microsoft Gaming, in a memo to staff.
Despite Layoffs, Microsoft’s Financials Stay Strong
Interestingly, the workforce cuts come at a time when Microsoft is delivering exceptional financial results. In the March quarter alone, the company reported:
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$70 billion in revenue
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Nearly $26 billion in net income
Thanks to booming demand for Azure cloud services and productivity software like Microsoft 365, executives anticipate 14% year-over-year revenue growth for the June quarter. Microsoft’s stock also hit a record high of $497.45 per share on June 26.
Tech Industry-Wide Downsizing Continues
Microsoft isn’t alone. Several other tech companies are slimming down in 2025:
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Autodesk
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Chegg
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CrowdStrike
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ADP (reported a surprising 33,000 job loss in June)
This trend reflects a broader pattern where software and cloud companies are trimming excess and focusing on scalable growth amid economic uncertainty and increased automation.
Final Thoughts: Why This Matters
Microsoft’s latest layoffs may seem counterintuitive given its strong financials, but they highlight a growing focus on leaner, more agile teams in the tech world. With AI, cloud, and productivity tools driving the next wave of digital transformation, tech giants are optimizing not just for size—but for speed and innovation.
If you’re in tech or planning a career in it, this shift is a reminder: adaptability and upskilling are more important than ever.
What Do You Think?
Do you believe large tech firms should continue trimming staff while reporting record profits? Let’s discuss in the comments!