Microsoft will layoffs 3% of its global workforce. This decision affects about 7,000 employees. The company aims to make its operations more streamlined. Microsoft wants a flatter organizational structure. It will prioritize engineering talent for its AI projects. This move follows better-than-expected quarterly results for the company.
This workforce reduction is Microsoft’s second largest ever. The largest was in 2023, when 10,000 employees were let go. Unlike earlier performance-based cuts, these Microsoft layoffs are structural.
Positions Likely Impacted
- Middle management roles are expected to be most affected.
- The company aims to increase the “span of control” for remaining managers.
- Engineering and coding roles may be less impacted.
New Policies Introduced
- A two-year rehire ban for employees leaving due to performance issues.
- A “good attrition” metric to track voluntary departures.
- Employees facing performance issues will get a Performance Improvement Plan (PIP) or a separation agreement.
- The separation agreement includes 16 weeks of severance pay.
- Employees choosing PIP have five days to decide and will lose severance eligibility.
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This restructuring reflects a trend in the tech industry. Other big tech companies like Amazon and Google have also focused on efficiency. They are reducing management layers. Meta also plans layoffs this year. Microsoft’s CEO Satya Nadella mentioned sales execution changes after recent financial results. The company wants to focus on AI and cloud revenue growth. Affected employees will remain on payroll for 60 days and may receive rewards and bonuses.
