Microsoft Culls Global Workforce by 4,800 Amidst AI Investment
The tech giant's job cuts, affecting approximately 2.1% of its employees, are reportedly linked to funding its artificial intelligence initiatives.
Microsoft is implementing global job cuts that will eliminate approximately 4,800 positions, representing about 2.1% of its worldwide workforce. The tech giant confirmed the layoffs on Tuesday, with the reductions expected to impact employees across its international operations, including Australia.
The company employs around 3,000 people across its six offices in Australia, and some of these staff members are anticipated to be among those made redundant. This move follows earlier workforce adjustments this year, which included offering voluntary buyouts to about 7% of its U.S. staff, totaling approximately 9,000 individuals.
Microsoft's chief people officer, Amy Coleman, communicated to employees that the eliminated roles are not being directly replaced by artificial intelligence. However, she acknowledged that AI is transforming the nature of work. The company's Xbox gaming division is also undergoing a significant restructuring, with five studios being closed and 3,200 jobs being cut within that segment.
Industry analysts suggest that Microsoft's workforce reduction strategy is intended to finance its growing investments in AI. According to Gil Luria, managing director at DA Davidson, by managing its headcount, Microsoft has been able to accelerate revenue growth while maintaining its profit margins.
Microsoft joins a growing list of major technology firms that have recently announced job cuts affecting their Australian workforce. In February, WiseTech revealed plans to eliminate around 2,000 jobs due to an "AI transformation program." Similarly, Commonwealth Bank announced its intention to lay off 300 Australian employees in the same week. Later, Atlassian co-founder Mike Cannon-Brookes stated that more than 1,600 Atlassian workers were made redundant, with a substantial portion, about 30%, based in Australia. Cannon-Brookes cited AI's impact on the required skill mix and the number of roles needed in certain areas as factors influencing these decisions.