The number of tech layoffs continues to tick upwards as AI investments increase, with Microsoft alone cutting around 4,800 employees, or roughly 2.1% of its workforce, this week.
The latest cutbacks are mostly in the company’s commercial sales and Xbox divisions. They follow two others in 2025 that impacted around 15,000 workers, or roughly 4% of the company’s workforce. Prior to the latest cuts, Microsoft had 220,000-plus employees.
The headcount reduction also comes just days after the announcement of Microsoft Frontier Company, an initiative that will provide embedded support for customers deploying AI projects, similar to traditional offerings from systems integrators (SIs).
Taken together, these moves seem to indicate that Microsoft is betting on its engineering expertise, rather than traditional account management, as the path to AI success.
“Microsoft had already reorganized its commercial business around AI,” said Thomas Randall, a research director at Info-Tech Research Group. “Recent layoffs are part of that ongoing context.”
