Microsoft to lay off thousands to streamline management: Report

Microsoft is planning to lay off thousands of employees in a bid to streamline operations, CNBC reported on Tuesday, citing a statement from the company.

In January, Microsoft let go of 2,000 underperforming employees without severance. The retrenchment had also affected staff in the gaming and sales divisions. The recent layoffs are not on the grounds of performance, though.

A company spokesperson told CNBC that the fresh layoffs, meant "to reduce layers of management", will affect 3% of its workforce. Microsoft had a headcount of 228,000 as of last June, which puts the number of affected employees in the neighbourhood of 7,000.

“We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace,” the spokesperson said.

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This would be Microsoft's largest round of layoffs since eliminating 10,000 employees in 2023.

Earlier this month, Microsoft implemented a two-year ban on re-hiring employees who are let go due to performance reasons in a broader shift regarding performance management and employee retention.

The company is designating these job cuts as “good attrition”, in the same vein as Amazon’s “unregretted attrition” metric, which sets a target for the number of employees an organisation is willing to lose each year.

The layoffs come days after the Azure parent reported strong March quarter earnings on the back of strong cloud computing and artificial intelligence (AI) businesses, beating analyst expectations. The Redmond, Washington-based company saw net profits climb 18% to $25.8 billion, compared to the same period last year.