Microsoft began laying off about 6,000 workers Tuesday, nearly 3% of its entire workforce, in its largest job cuts in more than two years as the company spends heavily on artificial intelligence. Hardest hit was the tech giant's home state of Washington, where Microsoft informed state officials it was cutting 1,985 workers tied to its Redmond headquarters, the AP reports. Microsoft said the layoffs will be across all levels, teams, and geographies but the cuts will focus on reducing the number of managers. Notices to employees began going out on Tuesday. Microsoft employed 228,000 full-time workers as of last June, the last time it reported its annual headcount. About 55% of those workers were in the US.
The mass layoffs come just weeks after Microsoft reported strong sales and profits that beat Wall Street expectations for the January-March quarter, which investors took as a dose of relief during a turbulent time for the tech sector and US economy. "I think many people have this conception of layoffs as something that struggling companies have to do to save themselves, which is one reason for layoffs but it's not the only reason," says Daniel Zhao, lead economist at workplace reviews site Glassdoor. "Big tech companies have trimmed their workforces as they rearrange their strategies and pull back from the more aggressive hiring that they did during the early post-pandemic years."
Microsoft CEO Satya Nadella told Meta CEO Mark Zuckerberg at an AI event last month at Meta's headquarters that "maybe 20, 30% of the code" for some of Microsoft's coding projects "are probably all written by software." Even if AI is increasingly helping Microsoft software engineers, however, doesn't necessarily mean it's a chief reason for laying them off. "When these big tech companies say that they're trimming management layers, that doesn't really sound like it's being driven by AI," Zhao says. "You're not expecting ChatGPT to replace the manager."
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