MS lays off 9,000 employees in just two months... Third round this year

Korea Economic Daily

Summary

Microsoft (MS) announced it will lay off 9,000 employees.
The main target of this layoff is middle managers, and it is analyzed that the layoffs aim to offset AI infrastructure expenditures and enhance the internal use of AI tools.
So far this year, MS has made over 15,000 cuts across three rounds, and further layoffs may bring the total close to the largest restructuring in 2014.

Middle managers are the main targets of the layoffs

Analysis: "Offsetting AI infrastructure expenditures"

Microsoft (MS) is laying off 9,000 employees. This is a large-scale restructuring in just two months. The move is interpreted as an effort to increase operational efficiency with artificial intelligence (AI), reduce labor costs, and thus expand AI infrastructure.

On the 2nd (local time), MS announced in an official statement via a spokesperson that it will let go of about 9,000 people across various business units worldwide. This number represents about 4% of Microsoft's total global workforce of 228,000 as of last year. According to Bloomberg News, an MS spokesperson said, "We will continue to make necessary organizational changes to ensure the company and teams can succeed in a dynamic market environment."

This layoff marks the third massive restructuring at Microsoft this year. In January, MS cut about 1% of its entire workforce, mainly targeting low performers. In May, more than 6,000 employees were laid off. In total, more than 15,000 jobs have been cut so far this year. Continued layoffs may bring the scale of this year's restructuring close to the company's largest-ever layoff in 2014 (about 18,000 people).

The principal targets of the layoff are expected to be middle management positions. Phil Spencer, CEO of Microsoft's gaming division, sent an email to employees explaining, "To drive the gaming business toward sustainable success and focus on strategic growth areas, we will wind down or scale back certain operations," and "in line with precedents, we will remove management layers to improve flexibility and efficiency."

Previously, Bloomberg News reported that sales departments are also likely to be major targets. Some analysts say the reduction in employees is aimed at offsetting the increased spending on building AI infrastructure while also strengthening internal usage of AI tools.

Silicon Valley correspondent = Song Young-chan 0full@hankyung.com