The wave of layoffs in the tech industry shows no signs of stopping. After thousands of job cuts by giants like Meta and Amazon, software giant Microsoft has also laid off its employees.
The company has officially announced that it is laying off approximately 2.1% of its total workforce, or 4,800 employees. This decision comes at a time when the company is starting its new financial year, and Microsoft often restructures according to its budget and strategy during June-July. The primary reason behind this major layoff is said to be the increasing investment in artificial intelligence (AI).
Currently, there is a race among major tech companies to adopt AI, and according to a Reuters report, total investment in this sector could exceed $700 billion this year. Microsoft is heavily investing in building new data centers to strengthen its AI infrastructure, which has directly impacted the company's cash flow. Although demand for the company's cloud business Azure has increased, heavy spending on infrastructure has put pressure on profits.
Reports suggest that the layoffs will most significantly impact the sales, consulting, and Xbox gaming divisions. Microsoft's gaming business head Asha Sharma has clarified that significant changes are needed in this business. She noted that the company's profit has dropped to just 3%, while over the past five years, the company has invested more than $20 billion in gaming content, platforms, and hardware.
Despite heavy investment, the company's annual revenue has seen a decline of about $500 million, making cost-cutting a necessity. The beginning of 2026 has been quite challenging for Microsoft in the stock market, with a significant decline of 23% in the company's shares in the first six months, marking the worst performance since 2022.
To alleviate this pressure, the company had offered voluntary buyouts to 9,000 of its U.S. employees at the beginning of the year. The departure of an additional 4,800 employees indicates that the tech industry is currently undergoing significant changes and economic uncertainty, where AI infrastructure is being prioritized over the human workforce.
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