Microsoft to Slash 6,000 Jobs in Largest Workforce Cut Since 2023

Over 6,000 workers from all levels, teams, and regions will be affected by Microsoft's announcement that it will lay off 3% of its global workforce. The goal of the layoffs at the Redmond giant, which had 228,000 employees as of late June, is to simplify processes and lower management levels.

A Microsoft representative informed a media source in a statement that the company is still making the organisational adjustments required to put the business in the best possible position for success in a changing market.

This is Microsoft's biggest layoff since the company cut 10,000 positions in 2023. The corporation stated that these layoffs are structural in nature, in contrast to the smaller performance-based cuts that were made in January.

Middle Management will be Severely Impacted

Given that the organisation wants to increase each manager's "span of control" in order to build a more efficient hierarchy, middle management positions may be especially affected by these cuts. According to a media report, Microsoft wants to give engineering talent top priority as it continues to make significant investments in artificial intelligence projects.

 Is engineering skill more important to Microsoft than other positions? The company responded to that query by stating that every role is equally significant. Indeed, it is essential to the advancement of AI.

A media house was informed by Microsoft's spokesperson that laid-off workers will continue to be paid for the sixty days following their dismissal. Additionally, it is said that the impacted employees will also qualify for bonuses and incentives.

New Employment Strategy Adopted by Microsoft

The reduction in staff coincides with major modifications to Microsoft's performance management system. Internal records seen by multiple media outlets reveal that the corporation has banned staff fired for poor performance from being hired again for a period of two years.

 Additionally, Microsoft has implemented a "good attrition" statistic to monitor the departure of desired employees. Similar to Amazon's contentious "unregretted attrition" policy, this strategy indicates Microsoft's intention to handle underperforming employees more forcefully.

A "Global Voluntary Separation Agreement" with 16 weeks of severance pay or a performance improvement plan (PIP) with "clear expectations and a timeline for improvement" are the two options available to employees who exhibit poor performance under the new system.

 If they choose the improvement plan instead of the PIP road, they will no longer be eligible for the severance compensation, and they will only have five days to make up their minds.

Leaner Operational Structure Getting Popular Among Tech Sector

The reorganisation of Microsoft is indicative of a larger movement in the computer sector towards more efficient engineering and flatter organisational structures.

According to reports, the organisation is concentrating on lowering the "PM ratio"—the percentage of managers to engineers—across all teams. Similar tactics, which involved firing the top tier of the organisation, have been used at other major huge companies, including Google and Amazon.

In addition, Meta is anticipated to let off thousands of workers this year as CEO Mark Zuckerberg advocates for a "year of efficiency".

The layoffs come despite Microsoft's better-than-expected quarterly results in April, when CEO Satya Nadella said the business will restructure how it executes sales after non-AI Azure cloud revenue grew less than anticipated.