Microsoft Reshapes Organization with 3% Workforce Reduction, Targets Middle Management

In a significant organizational shift, Microsoft announced plans to cut approximately 3% of its global workforce, targeting a reduction in management layers as the tech giant streamlines its operations. The move, affecting roughly 11,000 employees across the company’s divisions, represents one of the larger restructuring efforts at Microsoft in recent years.

According to internal communications reviewed by Bloomberg, CEO Satya Nadella emphasized that the cuts are designed to “reduce layers of management” and create a more agile organization. “These changes are about creating a more efficient Microsoft that can deliver even greater impact for our customers and partners,” Nadella wrote in an email to employees.

The Seattle-based company, which employs approximately 221,000 people worldwide as of late 2024, has seen significant growth in recent years, particularly in its cloud computing and artificial intelligence divisions. However, industry analysts suggest the cuts reflect broader trends in the technology sector, where companies are reassessing organizational structures after periods of rapid expansion.

Dare Obasanjo, a longtime Microsoft employee who identifies himself as a “Lead Program Manager on Bing,” offered insight into the restructuring on his social media account. “Microsoft is cutting thousands of jobs today to reduce management layers,” Obasanjo posted on BlueSky. “It’s a good reminder that the tech industry has gotten fat with too many managers managing managers who manage ICs [individual contributors].”

CNBC reports that the layoffs will be implemented across various divisions rather than targeting specific business units. This approach differs from previous restructuring efforts at the company, which often focused on particular product areas or recently acquired businesses.

The Seattle Business Journal notes that the cuts come despite Microsoft’s strong financial performance, with the company reporting $62.5 billion in revenue for its most recent quarter, a 17% increase year-over-year. Cloud revenue, particularly from the Azure platform, grew by 29% during the same period.

The Verge reports that affected employees will receive severance packages and extended healthcare coverage, consistent with Microsoft’s approach in previous workforce reductions. The company also plans to provide career transition services for those impacted by the cuts.

Financial markets reacted modestly to the news, with Microsoft shares showing minimal movement in early trading. Yahoo Finance notes that investors appear to view the restructuring as a routine operational adjustment rather than a signal of broader financial concerns.

This restructuring follows similar moves across the technology sector. According to data compiled by ZeroHedge, major tech companies have announced over 32,000 job cuts in the first five months of 2025, continuing a trend of workforce optimization that began in late 2023.

Industry publication Slashdot highlighted that while Microsoft’s 3% reduction is significant in absolute numbers, it represents a smaller percentage than cuts at some competitors, which have ranged from 5% to 10% of their respective workforces.

The restructuring is expected to be completed by the end of Microsoft’s fiscal year in June, with the company maintaining its commitment to growth in strategic areas including artificial intelligence, cloud infrastructure, and cybersecurity.