San Francisco. Microsoft is laying off about 6,000 employees, nearly 3 percent of its workforce, in its largest job cuts in over two years. The layoffs, which were announced on Tuesday, are part of the company’s ongoing restructuring as it shifts focus toward artificial intelligence (AI).

The hardest-hit area is Microsoft’s home state of Washington, where 1,985 employees, many in software engineering and product management roles, will be let go. The job cuts will span across all departments and regions, but will primarily target management positions, according to the company.

Despite reporting strong profits for the January-March quarter, which exceeded Wall Street expectations, Microsoft’s workforce reductions highlight broader industry trends. “Big tech companies have trimmed their workforces as they adjust their strategies and scale back from aggressive post-pandemic hiring,” said Daniel Zhao, lead economist at Glassdoor.

Microsoft employed 228,000 workers as of June 2023, with 55 percent based in the US. The recent layoffs follow a smaller round of performance-based cuts earlier in the year. The company’s last major layoff came in early 2023, when it eliminated 10,000 positions, approximately 5 percent of its workforce, aligning with the trend of tech companies downsizing after rapid pandemic-era expansions.

Amy Hood, Microsoft’s chief financial officer, explained that the company is focusing on building high-performing teams and increasing agility by reducing managerial layers. She said that, as of March, Microsoft’s headcount had increased by 2 percent compared to the previous year, though it had decreased slightly from December.

The layoffs affect various Microsoft divisions, including Xbox and LinkedIn. Scott Hanselman, a VP at Microsoft, shared his emotional response on LinkedIn, writing, "This is a day with a lot of tears."

Microsoft’s investments in AI, totaling $80 billion for the fiscal year ending in June, continue to drive the company’s growth. However, AI is not the primary reason for the layoffs. Zhao pointed out that trimming management layers is more about long-term strategic adjustments than AI’s influence on job reductions.

In Washington, about 1,500 of the laid-off workers were based in Microsoft offices, with 475 working remotely. Their last official day will be in July.

These job cuts are part of the broader tech industry’s recalibration after rapid pandemic-era growth, as companies adjust to economic realities and evolving business priorities.

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