Microsoft moves towards AI transformation following 9000 job cuts in 2025

Microsoft focuses on AI transformation after cutting 9000 jobs, part of wider restructuring in 2025.

Microsoft CEO Satya Nadella has confirmed the company’s commitment to an AI transformation following the layoff of 9000 employees in July 2025.

These cuts are part of a broader restructuring, with over 15,000 roles removed this year. Microsoft has stated it is not facing financial issues but is shifting priorities, with significant investment in AI infrastructure, including data centres and Copilot tools.

In May, Microsoft laid off 6000 engineers and developers, while the July reductions focused on sales and support teams. The company is using third-party representatives and AI tools that currently write 30 per cent of its code, reducing the need for certain roles.

Addressing the layoffs in a company-wide memo shared by Business Insider, Nadella described the decisions as “among the most difficult”. He added that the company’s overall headcount is “relatively unchanged”, despite the nearly four per cent workforce reduction.

Nadella acknowledged the uncertainty created by these changes, stating, “It might feel messy at times, but transformation always is.”

He encouraged employees to view the shift positively, highlighting benefits such as “more speed, more scale, more impact” and describing a future where AI researchers and coding assistants are readily accessible to employees.

Microsoft has identified security, quality, and AI as its current priorities, with AI described as a key factor in the company’s future operations.

The move aligns with broader industry trends, with companies including Google, IBM, and Netmarble also adopting AI tools to restructure operations and reduce costs.