Fifth month of layoffs at Microsoft — what’s driving the cuts

It’s a new month, and unfortunately, that means even more layoffs at Microsoft. This time, it’s not thousands of employees, but just over 40 roles in Redmond (via Seattle Times). Even so, it marks the fifth consecutive month of job cuts in 2025, bringing the total to more than 15,000 employees since Microsoft announced its $80 billion AI investment commitment.

The question now is whether these smaller September layoffs signal a slowdown, or if Microsoft plans to continue trimming staff month after month to make way for its AI-powered future. Microsoft at least appears to be following a trend regarding its layoffs. The latest round in Redmond targeted engineering, product management, and legal roles at its headquarters.

The cuts are far smaller than earlier rounds — 6,000 jobs in May and 9,000 in July — but they still form part of Microsoft’s broader restructuring plan. This steady drip of layoffs suggests a deliberate effort to keep pressure on costs, even if the numbers are smaller. It raises an uncomfortable question: has Microsoft normalized monthly layoffs as part of its new way of operating?

The $80B AI gamble behind the cuts

In 2025, Microsoft announced that $80 billion investment into AI — a $25 billion increase from the previous year. The money is going into data centers, custom chipsets, cloud expansion, and further development of tools like Copilot.

Satya Nadella described this as the “enigma of success,” pointing to record profits but also the pressure to reduce costs. That tension is at the heart of recent criticism. The investment commitment came before the bulk of layoffs, creating frustration as Microsoft pushed ahead with massive spending while cutting thousands of jobs.

At the same time, the company has been urging employees to rely more heavily on AI tools in their workflows. Microsoft also laid out 40 job roles at risk of being eliminated by AI. The layoffs also followed news that Microsoft had secured $6 billion in government savings over three years, adding to the perception that the cuts are less about financial necessity and more about long-term priorities.

The bigger picture is clear: Microsoft is shifting resources to secure dominance in AI, not responding to immediate financial struggles.

Reshaping Microsoft’s workforce

Layoffs at Microsoft seem to be part of a bigger transformation, and it’s not all about saving money. Roles have been cut across key parts of the company, including Xbox, LinkedIn, engineering, legal, product management, research, support, and sales.

At the same time, Microsoft is still hiring — but the focus has shifted. The company is bringing in talent for AI, machine learning, cloud infrastructure, and Copilot development. Satya Nadella has even said that a portion of Microsoft’s code is now written by AI, and I’ve noticed a new role floating around online: “professional vibe code cleaners” (via LinkedIn). I’d like to think anyone using AI to write code at Microsoft can actually code themselves, or at least I hope so.

To balance this shift, Microsoft is also investing in reskilling. Its $4 billion “Elevate” program aims to help millions of people prepare for jobs in the AI era, reflecting a longer-term vision of how the workforce will evolve.

What it means for employees and the industry

Any round of layoffs, especially at Microsoft’s scale, creates anxiety and uncertainty. A culture of fear and job insecurity can quickly take hold. On top of that, employees face the added pressure of learning new AI tools just as those same tools are replacing traditional roles — something that understandably leaves a sour taste.

This isn’t unique to Microsoft. Amazon, Meta, Google, and others are making similar AI-driven cuts. Workflows across the industry are shifting as companies double down on automation and AI-powered systems.

The September layoffs are not an isolated event, but part of a broader transformation. Microsoft, and the tech sector as a whole, is clearly prioritizing AI, even if that means reshaping work in ways that feel deeply unsettling for many employees.