Microsoft is laying off thousands of employees, even as its profits and stock prices reach an all-time high. For many people worry about the future of work in the era of artificial intelligence, the information is shocking: performance and profitability are no longer a protection for the axe.
The software giant played a central role in the generative AI boom, confirming to Gizmodo on Wednesday that it is laying off another round of layoffs. While Microsoft doesn’t provide exact figures, saying it has less than 4% of its workforce, Gizmodo estimates the total cuts for about 9,000 jobs, and has previously reported a year-round reduction, according to internal announcements.
As of June 2024, the company last disclosed its global workforce of 228,000 employees.
So far, the way layoffs have developed: Less than 1% of jobs were laid off in January (performance-related) and in May, more than 6,000 jobs were eliminated in June. With this latest wave, Gizmodo calculated the total cuts in July were about 8,777 jobs, accounting for 4% of the global workforce.
“We will continue to implement the organizational and workforce changes necessary to bring companies and teams to success in dynamic markets,” a Microsoft spokesperson said in a statement.
Cuts can affect a range of levels, departments and geographic locations. A source familiar with the matter told Gizmodo that Microsoft’s gaming division, including Xbox, is one of the affected areas.
Record profit, record cuts
The timing of layoffs is in sharp contrast to the company’s financial performance. Microsoft is the second highest valued company in the world with a market capitalization of $36.5 trillion, only behind Nvidia. It is also in good financial condition. In the most recent fiscal quarter: The company announced in April that its net revenue rose 18% to $25.8 billion. Revenue climbed 13% to $70.1 billion.
“Cloud and AI are important opinions for every business to expand output, reduce costs and accelerate growth,” CEO Satya Nadella said in April. “From AI infrastructure and platforms to applications, we innovate across the stack to serve our customers.” This innovation can also make thousands of jobs obsolete.
Although Microsoft has not yet formally linked these job layoffs to the rapid adoption of AI, timing has raised problems. Nadella told CEO Mark Zuckerberg at the Meta Llamacon conference in April that 20 to 30% of Microsoft’s code is now written by AI Tools.
Microsoft CTO Kevin Scott goes further, predicting that by 2030, AI will write 95% of all code used by the company.
The tech giant has invested billions of dollars in generative AI, most notably in its close partnership with Openai. These include integrating large language models into Microsoft Office, Github, Azure, and Windows products. These tools are able to write, debug, and deploy code, and handle administrative tasks, customer support, timelines, and more. The company bets that these technologies will reshape the way they work. But for many employees, especially in technology, AI is already replacing tasks and jobs.
Microsoft is not alone
Throughout the industry, executives now openly acknowledge that AI is shrinking its workforce. Salesforce CEO Marc Benioff recently said AI is “making up 50% of the job” at his company before announcing another 1,000 layoffs. Klarna CEO Sebastian Siemiatkowski said AI allows fintech companies to reduce their workforce by 40%. IBM and Duolingo also confirm that they are replacing teams or functions with AI systems
As AI tools become increasingly capable and cheaper than full-time employees, companies may continue to lower workers even as record growth is reported. Microsoft’s latest move will only strengthen this trend. Currently, the company insists that staying competitive is just a restructuring. But for workers watching AI, generating code and copying – executives celebrate those gains – the writing may already be on the wall.
