Key Takeaways
- Microsoft’s recent job cuts disproportionately affected software engineers, who are central to product development.
- The layoffs align with Microsoft’s increased investment in artificial intelligence and the rise of AI tools that can automate coding tasks.
- Product management and technical program management roles also faced significant reductions.
- This trend isn’t unique to Microsoft; other tech companies are also reshaping their teams to prioritize AI.
Microsoft’s latest round of job cuts has heavily impacted the people who build its products, signaling that even software developers are not immune in the era of artificial intelligence.
In Washington, Microsoft’s home state, software engineering was the single largest job category affected by the layoffs. These roles accounted for over 40 percent of the approximately 2,000 positions eliminated there, according to state documents reviewed by Bloomberg.
These cuts in Washington represent about a third of the nearly 6,000 global workforce reductions Microsoft announced in mid-May.
As Microsoft and its competitors pour billions into AI, they are carefully examining costs and shifting budget priorities. Company executives have recently emphasized the need to manage spending, even with massive investments in new data centers.
At the same time, AI-powered tools that can write and analyze code are automating parts of software development. Microsoft’s CEO Satya Nadella mentioned in April that AI now writes as much as 30 percent of the code for some projects.
This shift is not isolated. Several tech companies are reorganizing their workforces to focus on AI. For example, Salesforce planned earlier this year to reduce its workforce by over 1,000 employees while hiring for AI-focused roles, particularly in sales. Its CEO, Marc Benioff, also indicated a reduction in hiring engineers due to AI. Similarly, when Workday announced layoffs in February, its CEO Carl Eschenbach said hiring would continue in strategic areas like AI.
Beyond software engineers, many of Microsoft’s affected employees were involved in managing software projects. Product management and technical program management roles together made up nearly 30 percent of the reductions in Washington.
The job cuts also targeted some managers and even workers assigned to AI projects, a person familiar with the cuts informed the news source. In contrast, the data shows that relatively few customer-facing roles, such as sales or marketing, were impacted.
Microsoft stated the layoffs were intended to remove layers of management. However, it’s not entirely clear how much “de-layering” is actually taking place. About 17 percent of those laid off in Washington were classified as managers, a figure similar to the company’s overall percentage of managers at the end of 2023, according to a workforce report.
Microsoft declined to comment on the specifics of the layoffs.
