Microsoft is reportedly gearing up for a third major round of layoffs this year, primarily targeting its global sales and customer support teams, as the company intensifies its focus on artificial intelligence (AI) infrastructure. According to media reports, more than 1,000 jobs are likely to be cut in early July, aligning with the beginning of Microsoft’s new fiscal year. This latest third major round of layoffs is part of a broader restructuring effort aimed at reallocating resources toward AI-driven growth, including massive investments in data centers and advanced computing capabilities.
The layoffs, expected to affect employees working in sales and customer-facing roles across various regions, come at a time when Microsoft is projected to spend close to $80 billion this year on building and upgrading data centers to support its expanding AI ambitions. Industry analysts suggest that the company is attempting to balance this aggressive capital expenditure by trimming operational costs and simplifying its workforce structure. These job reductions are also seen as part of a broader transition toward AI-enhanced sales and support processes that rely more on automation and fewer on traditional manpower.
This will be the third significant layoff phase by Microsoft in 2025. In January, the company quietly let go of around 2,000 employees in what it called a “performance-related” exercise. This was followed by a more noticeable downsizing in early June that impacted approximately 6,000 employees across engineering, LinkedIn, middle management, and other verticals—amounting to roughly 3% of Microsoft’s global workforce. The upcoming layoffs are expected to primarily affect the sales division, which currently employs around 45,000 people out of the company’s total workforce of 228,000.
The sales cuts reflect a strategic shift as Microsoft adopts AI-driven go-to-market models. These models are increasingly reliant on automation and third-party sellers, especially when dealing with small and medium-sized businesses. By reducing headcount in conventional sales roles, Microsoft aims to streamline operations and boost long-term efficiency. Bloomberg and other industry observers note that AI tools like generative chatbots are already transforming roles in sales, support, and customer service across the tech sector.
Despite the wave of layoffs, Microsoft continues to perform strongly in the financial markets. Its stock recently reached a record high, trading near $480, buoyed by growing investor confidence in its AI and cloud services. However, analysts caution that such performance is also tied to tight operational control. Some experts believe Microsoft may need to cut around 10,000 jobs annually to keep pace with the depreciation and upkeep costs associated with its expanding AI infrastructure.
Microsoft’s actions are part of a larger trend within the tech industry, where companies like Amazon, Alphabet, and others have also made significant workforce reductions to prioritize AI innovation. While the layoffs reflect short-term disruptions for employees, they underscore a broader transformation in the way tech giants are positioning themselves for the future—streamlined, AI-powered, and leaner than ever before.
