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Microsoft has announced that it is laying off around 9,000 employees, cutting just under 4% of its global workforce.

The company says this move is part of a larger effort to simplify management layers and help teams work more quickly and effectively.

The news came on the second day of Microsoft's 2026 fiscal year. A company spokesperson explained, "We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace."

This is the third round of job cuts at Microsoft this year. The company let go of fewer than 1% of workers in January, over 6,000 in May, and at least 300 in June. Microsoft had about 228,000 employees as of June 2024, CNN said.

Phil Spencer, CEO of Microsoft Gaming, also confirmed that his division is affected.

In a note to employees, he wrote, "We will end or decrease work in certain areas of the business and follow Microsoft's lead in removing layers of management to increase agility and effectiveness."

AI Growth Surges as Microsoft Trims Workforce

The layoffs come as Microsoft continues to invest heavily in artificial intelligence. CEO Satya Nadella said earlier this year that AI now helps generate 20% to 30% of the company's code.

Microsoft has been spending billions on AI tools and cloud services to stay ahead of the competition.

The Verge reported that sales and Xbox teams are among those impacted by the cuts. However, Microsoft has not shared details about which departments are affected the most.

Despite the job cuts, Microsoft's business remains strong. The company earned nearly $26 billion in profit on $70 billion in revenue during the March quarter.

Analysts expect even more growth this quarter, thanks to increasing demand for its Azure cloud and productivity software.

On the stock market, Microsoft shares closed slightly lower at $496.55 on Wednesday, a day after hitting a record high. According to CNBC, the S&P 500, by contrast, gained 0.5% that day.

Microsoft's move follows similar layoffs across the tech industry this year. Other software companies like Autodesk, Chegg, and CrowdStrike have also reduced staff.

Payroll giant ADP said this week that the US private sector lost 33,000 jobs in June.

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