Microsoft fires 6000 employees…To sharpen focus on AI

• Microsoft is trimming 3% of its 228,000-strong workforce—about 6,840 roles.
• Hardest hit: Software engineers!
• Why now? Satya Nadella has made it clear: AI now writes 20–30% of Microsoft’s code. Fewer engineers, leaner teams, faster AI-driven delivery.
• In 2023 they cut 10,000 job roles and 2,000 in gaming earlier this year!

Anatomy of the layoff

In Washington state—the heart of Microsoft’s operations—2,000 positions were eliminated.

• Software engineers accounted for over 40% of those cuts.
• Product and technical program managers made up nearly 30% (around 600!)

Who got spared?

Interestingly, sales and marketing roles were largely unaffected.

But why the firing?

A top objective: “reduce layers of management” to speed decision-making and increase each manager’s span of control.

By promoting efficiency—leaner hierarchies, fewer hand-offs—Microsoft aims to match the agility of smaller AI-first startups

Is AI behind all of this?

Coincidentally, at Meta’s recent LlamaCon conference, Microsoft CEO Satya Nadella revealed that AI now writes between 20% to 30% of the code within Microsoft’s repositories.

Major productivity boosts were seen in Python projects.

This layoff signals a broader industry truth: once AI reaches a productivity inflection point, headcount rationalization quickly follows.

And yes, even an AI director wasn’t spared.

Gabriela de Queiroz—Microsoft’s own Director of AI and a leading voice for ethical, inclusive AI—publicly confirmed her layoff in a poignant LinkedIn post:

“Bittersweet news to share: I was impacted by Microsoft’s latest round of layoffs,” she wrote.

Other global tech layoffs due to AI

Microsoft is not alone when it comes to partaking in massive job cuts.

• Salesforce cut thousands in February 2025, even as it hired for AI sales roles.
• In May 2025, IBM’s CEO, Arvind Krishna, confirmed they replaced hundreds of HR staff with its AskHR AI agent, automating 94% of routine tasks.
• Workday shed 1,750 roles to fund AI and global expansion.

Finally, comes the Swedish Fintech Buy Now Pay Later Klarna, whose experiment to swap 700 agents for AI flopped.

Klarna has resumed hiring human agents!

According to Klarna CEO Sebastian Siemiatkowski, “Unfortunately, cost seems to have been a too predominant evaluation factor when organizing this, so what you end up with is lower quality.”

Also read: PwC lays off 1,500 people from their US workforce

Meanwhile…

In January 2025, Satya Nadella announced a $3 billion investment in India’s cloud and AI infrastructure, over the next two years.

Here is a brief overview of the plan,

• Train and skill 10 million people in India by 2030.
• Microsoft Research Lab launched an AI Innovation Network, an initiative designed to accelerate the transition from research to real, usable business solutions.
• Microsoft and SaaSBoomi (a community shaping India’s SaaS industry) joined hands to propel India’s AI and SaaS ecosystem towards a trillion-dollar economy. This collaboration aims to impact over 5,000 startups and 10,000 entrepreneurs.

Also read: EY Australia layoffs amid slowing growth & industry challenges

How’s the Big 4 responding to AI?

EY seems to have a different take regarding incorporating AI in their day-to-day operations.

CEO Janet Truncale assured their 400,000 workforce, that AI won’t take away their jobs.

While attending the Milken Institute Global Conference in Los Angeles, she mentioned,

“We’re not going to decrease the size of our workforce.” 

Guess, only time will tell.

Wrapping up…

Zoho’s Sridhar Vembu has a warning for software engineers: Don’t get complacent — those high tech salaries aren’t guaranteed.

The World Economic Forum’s Future of Jobs Report (2025) projects that:

• 92 million jobs will be displaced globally by 2030 due to automation and AI.
• 170 million new jobs will be created, driven by macro trends and digital transformation.

How can companies bridge that gap? Reskilling employees for new roles, and investing in human-AI collaboration!