Microsoft Plans Fresh Wave of Layoffs Targeting Sales Teams

• Microsoft Corp. (MSFT) plans to cut thousands of jobs, primarily in sales, with announcements expected early next month after its fiscal year-end, following a May layoff of 6,000 employees.
• The layoffs, affecting part of its 228,000-strong workforce, including 45,000 in sales and marketing, aim to control costs amid tens of billions spent on AI infrastructure like servers and data centers.
• Microsoft’s strategy includes outsourcing software sales to small and mid-size customers to third-party firms, aligning with its focus on AI growth through Azure and partnerships to lead the $1 trillion AI market by 2030.

Microsoft Corp. (MSFT) is set to reduce its workforce by thousands, with a focus on sales teams, as it recalibrates its organizational structure to prioritize substantial investments in artificial intelligence, according to a Bloomberg report. The layoffs, expected to be announced early next month following the close of Microsoft’s fiscal year in June, come on the heels of a May reduction that eliminated 6,000 jobs, primarily in product and engineering roles, while largely preserving customer-facing positions. With 228,000 employees as of June 2024, including 45,000 in sales and marketing, Microsoft’s latest cuts reflect a strategic shift to optimize costs amid significant spending on AI infrastructure, such as servers and data centers, which totals tens of billions of dollars.

The report notes that the company’s decision to streamline its sales operations includes leveraging third-party firms to manage software sales to small and mid-size customers, a strategy disclosed to employees in April. This move aligns with Microsoft’s broader efforts to enhance efficiency while fueling growth in high-priority areas like AI, where it is a leading player through its Azure cloud platform and partnerships, such as with OpenAI. Microsoft’s leadership has emphasized to Wall Street its commitment to controlling expenses in non-core areas, a necessity as the global AI market is projected to exceed $1 trillion by 2030, per industry estimates, driving demand for robust computational infrastructure.

While the timing of the layoffs could shift, as noted by B’berg sources familiar with the matter, the reductions underscore Microsoft’s routine practice of reevaluating its organizational structure at fiscal year-end. The company’s focus on AI-driven innovation, including advancements in machine learning and generative AI tools, positions it to maintain competitive dominance in the tech sector. However, these workforce adjustments highlight the challenges of balancing cost discipline with ambitious growth objectives in a rapidly evolving industry, as Microsoft navigates the delicate interplay between human capital and technological investment.

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