Microsoft announces 4,800 layoffs amid heavy AI spending
New Delhi, July 6
Microsoft has announced another round of job cuts, eliminating around 4,800 positions, or approximately 2.1 per cent of its global workforce, as the technology giant continues to invest heavily in artificial intelligence while seeking to improve operational efficiency.
The latest layoffs come amid a broader trend across the technology industry, where companies are balancing massive AI investments with efforts to control costs.
Industry leaders such as Amazon and Meta have also reduced their workforces this year as spending on AI infrastructure continues to rise. Global AI-related investments by major technology companies are expected to surpass $700 billion in 2026.
The announcement follows a challenging first half of the year for Microsoft, with the company's shares declining nearly 23 per cent during the first six months of 2026, marking their weakest first-half performance since 2022.
Earlier this year, Microsoft had already offered voluntary buyouts to nearly 9,000 employees in the United States, representing about seven per cent of its domestic workforce. The company has traditionally made workforce adjustments near the end of its fiscal year in June as it prepares budgets and spending plans for the new financial year.
While Microsoft's Azure cloud computing business has continued to benefit from strong demand for AI services, the company is facing mounting costs associated with expanding its data centre infrastructure. Until April, Azure was the exclusive cloud provider for OpenAI's models, helping drive strong growth in Microsoft's cloud business. However, the significant investments required to support AI services have increased pressure on the company's cash flows.
Despite the financial strain, Microsoft remains optimistic about its AI business. In April, the company forecast quarterly Azure revenue above Wall Street expectations and projected capital expenditure of $190 billion for 2026, substantially higher than analysts' estimates. The company is scheduled to announce its latest financial results later this month.
The rapid adoption of AI is also reshaping Microsoft's traditional software business by automating routine tasks, while rising memory chip prices driven by demand for AI data centres have increased production costs. Those higher costs have prompted Microsoft to raise Xbox console prices at a time when demand for the gaming hardware has remained subdued.
— IANS
Reader Comments
As someone working in IT here in Bangalore, this hits close to home. The AI boom is real but so are the layoffs. Makes you wonder if the so-called 'efficiency' is worth the instability for thousands of families. 😕
I'm a software engineer in Pune, and honestly, this AI craze is scary. If even Microsoft can't balance investment with people, what hope do smaller firms have? The government should think about retraining programs for tech workers.
Layoffs of 4,800 is terrible, but let's be fair—Microsoft Azure is doing well because of AI demand. The problem is that every tech giant is chasing the same bubble. In India, we're seeing similar trends with IT firms cutting jobs while shouting about AI. It's a double-edged sword.
Respectfully, Microsoft could have handled this better. Voluntary buyouts are one thing, but forcing layoffs after already cutting 9,000 jobs earlier? It feels like they're treating employees as disposable. India's tech sector should prioritize sustainable growth over Wall Street pressure. 🇮🇳
I work in IT in Hyderabad, and this is a clear sign: AI is coming for our jobs, not just creating new ones. Microsoft's $190 billion capex shows where the future is headed. India needs to upskill fast or risk being left behind. Also, Xbox price hike? Ouch. 😅
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