Microsoft Begins 2025 with Layoffs Amid Performance Reviews

Microsoft has started the new year with a round of layoffs affecting a small portion of its workforce. The company confirmed that these job cuts, which impact less than 1 per cent of its 228,000 employees, are part of ongoing performance management efforts.

A Microsoft spokesperson highlighted the company's focus on maintaining high-performance standards. "At Microsoft, we are committed to fostering talent development. When employees fail to meet performance expectations, we take appropriate action," the spokesperson said.

The layoffs reportedly span multiple divisions, including the security department, according to Business Insider. Managers have spent several months reviewing employee performance at all levels, including senior positions. While underperforming roles are being eliminated, Microsoft has indicated that many of these positions may be refilled, ensuring minimal changes to the overall headcount.

This marks another instance of workforce reductions at Microsoft in recent years. In 2023, the company laid off approximately 10,000 employees, representing about 5 per cent of its workforce. Additional cuts followed in 2024, particularly in the gaming and Azure cloud computing divisions, where redundancies were addressed after the $75.4 billion acquisition of Activision Blizzard.

The tech sector has seen widespread layoffs since 2023, as companies such as Microsoft and Google focus on streamlining operations amid economic uncertainties. Analysts predict that these efficiency-driven workforce adjustments will continue into 2025.

Amid these changes, Microsoft is increasing its investment in artificial intelligence (AI). During a recent visit to New Delhi as part of the Microsoft AI Tour, Chairman and CEO Satya Nadella announced a partnership with India’s Ministry of Electronics and Information Technology (MeitY). The collaboration aims to train 500,000 individuals in rural India in AI skills, a move designed to empower underserved communities with advanced technological capabilities.

“There’s significant progress in AI skill development in India,” Nadella said, highlighting the country’s critical role in the global AI ecosystem.

Despite the layoffs, Microsoft continues to prioritize growth in AI and cloud computing. Its partnership with OpenAI, backed by an investment exceeding $13 billion, remains central to its strategy. Products such as the Microsoft 365 Copilot assistant underscore the company's push to integrate AI into its offerings.

In late 2024, Chief Financial Officer Amy Hood projected accelerated revenue growth from Microsoft Azure, driven by AI infrastructure.