NEW YORK – Microsoft began job cuts that will impact about 9,000 workers, its second major wave of layoffs in 2025 as it seeks to control costs while ramping up on artificial intelligence spending.

Less than 4 per cent of the company’s total workforce will be impacted, a spokesperson said.

The cuts will have an impact across teams, geographies and tenure and are made in an effort to streamline processes and reduce layers of management, the spokesperson added.

The terminations follow an earlier round of layoffs in May that hit 6,000 people and fell hardest on product and engineering positions. 

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

Bloomberg previously reported that Microsoft was planning to slash thousands of jobs in July, which would target salespeople and also affect divisions including Xbox.

Cuts began on July 2 across Microsoft’s gaming organisation, which had about 20,000 employees as at January 2024.

Its Stockholm-based King division, which makes Candy Crush, is cutting 10 per cent of its staff, or about 200 jobs, according to people familiar with the plans.

Other European offices, such as ZeniMax, also began cutting employees on July 2, said the people.

News of further job cuts trickled out slowly as other units of Microsoft Gaming, such as Call of Duty maker Raven Software, also announced workforce reductions. 

Microsoft also cancelled several projects that had been in development for years, including the fantasy game Everwild, in development at UK-based Rare Studio, and an original new online game from ZeniMax Online Studios, the maker of The Elder Scrolls Online.

Both of those studios will cut jobs as a result of the cancellations, according to the people.

Microsoft’s gaming division has been under pressure to boost profit margins since it purchased Activision Blizzard for US$69 billion (S$87.8 billion) in a deal that closed in October 2023.

Across the tech industry, companies are grappling with the spiralling costs of staying up to date in the AI race, whether by training the large language models that underpin the technology, building servers and data centres, or developing AI applications.

After spending tens of billions of dollars on data centres and application development, Microsoft has pledged to Wall Street that it would put a lid on costs. 

The reductions could help offset rising spending associated with the AI infrastructure build-out, wrote Bloomberg Intelligence analyst Anurag Rana. They may also reflect a greater push to use AI tools internally, he said.

Microsoft had 228,000 workers at the end of June 2024, 45,000 of them in sales and marketing. The tech giant often restructures teams and announces other changes near the end of its fiscal year, which closes in June.

Microsoft’s top sales executive Judson Althoff is planning to take a two-month sabbatical in July, Bloomberg reported in June.

The company has said his leave had been previously planned and that he will return in September. BLOOMBERG

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