Microsoft is reportedly planning another round of layoffs that will slash thousands of roles next week, marking the company’s third major workforce reduction in just over a year. The cuts come as concerns mount over out-of-control AI spending across the technology sector, according to Business Insider.
Less than 2.5% of the company’s 220,000-person workforce, or fewer than 5,500 workers, will be affected across the sales and consulting divisions, as well as Xbox’s gaming unit. The Redmond-based software giant plans to announce the layoffs next week, just after the start of its new fiscal year on Wednesday, though the timing could change. Some impacted employees will be offered new roles within the company immediately.
The move follows earlier rounds of cuts: 6,000 jobs eliminated last May and another 9,000, or 4% of its workforce, cut last July. Microsoft declined to comment when contacted by the New York Post.
The layoffs come amid a fundamental tension in the technology industry. Microsoft has committed $190 billion to new AI infrastructure over the coming years, yet faces fears that AI could render traditional software tools obsolete. The company’s shares tanked 19% in June, marking the stock’s worst month since the dot-com crash of the early 2000s.
For New York, where Microsoft maintains a significant corporate presence, the layoffs add to a growing list of workforce reductions in the tech sector. The company’s offices in Manhattan have been a key hub for its sales and consulting operations, and the latest cuts are expected to affect those divisions significantly.
News of additional layoffs was anticipated after Microsoft launched a voluntary retirement buyout round earlier this year for U.S. employees whose years of employment and age total 70 or higher. About a third of the company’s 9,000 eligible workers took the offer, allowing Microsoft to cut fewer roles in this year’s expected layoff round.
The technology sector as a whole continues to grapple with the disruption caused by AI. According to a Challenger, Gray & Christmas report released Wednesday, nearly a third of all job cuts this year have hit the tech sector, and AI was the leading reason cited for announced layoffs in June for the fourth consecutive month. Since 2023, AI has been cited in 173,568 job cut announcements.
Andy Challenger, the firm’s chief revenue officer, said in a statement that while the pace of layoffs cooled in June, the cuts remain concentrated in technology, and AI continues to reshape how companies think about headcount. The layoffs also come as Xbox faces its own challenges, with new CEO Asha Sharma calling for a ‘resetting’ of the company, saying it was ‘not in a healthy spot’ amid declining revenue.
The broader implications for New York’s tech workforce remain uncertain, but the pattern of repeated cuts at one of the industry’s largest employers signals a structural shift rather than a temporary adjustment.
