Microsoft announced today it will cut approximately 9,000 jobs, representing just under 4% of its global workforce, in its largest round of layoffs since 2023. The reductions, which span multiple divisions, geographies, and levels of seniority, come as the company continues to report robust financial results but seeks to streamline operations and adapt to rapid shifts in the technology landscape.

Why Microsoft is making the cuts

Despite posting an 18% year-over-year increase in net income last quarter—reaching $25.8 billion—Microsoft is moving ahead with significant headcount reductions. The company cited a need to reduce organizational layers with fewer managers and streamline its products, procedures and roles.

In its official statement, Microsoft said: “We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace.”

The layoffs are part of a broader restructuring effort that has now seen over 15,000 jobs eliminated this year, including 6,000 positions in May. 

This latest round is expected to impact sales, customer-facing roles, and the Xbox gaming division. Xbox head Phil Spencer told staff the company would “end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.”

Broader implications for the tech sector

Microsoft’s move reflects a wider trend among major technology companies, many of which are undergoing similar workforce reductions as they double down on artificial intelligence. The company has invested billions in AI infrastructure, and CEO Satya Nadella recently noted that up to 30% of Microsoft’s code is now written by AI tools. While Microsoft has not directly attributed the layoffs to AI replacing human workers, the timing and focus of the cuts suggest a shift toward a leaner, more automated organization.

The layoffs underline that the job market in tech is tightening even as companies like Microsoft continue to deliver strong earnings.

Disclaimer: For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.

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