“Necessary” adjustment | Microsoft announces up to 1,500 layoffs, leaked memo blames 'AI wave'

Microsoft announces up to 1,500 layoffs, leaked memo blames 'AI wave'

Microsoft will lay off up to 1,500 employees across its Azure for Operators and Mission Engineering departments, Business Insider reported on Monday.

The two teams are a part of Microsoft’s ‘Strategic Missions and Technologies’ (SMT) organization, with hundreds of jobs set to be cut.

The team is led by Jason Zander, former EVP of Microsoft Azure. A separate report from Business Insider on Monday revealed a leaked memo that showed Zander attributing the layoffs to greater investment by Microsoft in artificial intelligence (AI).

In a boilerplate statement shared with outlets including Reuters and CRN, Microsoft appeared to echo the memo, but without specifying the strategic pivot to AI.

“Organizational and workforce adjustments are a necessary and regular part of managing our business,” a spokesperson stated. “We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners."

The statement is identical to its response to outlets following job cuts in 2023, cementing its position that layoffs are frequently required as the tech company pivots to new products or services.

Microsoft laid off over 10,000 employees in January 2023, with a further, smaller round of cuts in July. The employer also eliminated 1,900 jobs in January of this year on its Activision Blizzard and Xbox teams.

Many other big tech companies have also announced major layoffs in the past 18 months including Intel, Google, Salesforce, and Amazon.

SMT has developed a reputation for innovation and cutting-edge projects including quantum computing. However, many with Azure products set to be halted, employees will either be re-assigned to the other cloud and AI product teams or will face being laid off.

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Other employees working on mixed reality products will also be laid off, Microsoft confirmed to CNBC on Monday. A source familiar with the matter told CNBC they expect over 1,000 layoffs across Microsoft, including in the mixed reality department.

Microsoft has previously disclosed its billion-dollar AI investments have brought developments and productivity savings. These include an HR Virtual Agent bot which it says has saved 160,000 hours for HR service advisors by answering routine questions.

With the flurry of layoffs across technology companies, the possible impact of AI has left many workers at companies across all industries worried about the safety of their roles, prompting HR teams to consider how they can support their workforce through a transition to AI-centric work, including reskilling programs.

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