Microsoft has let go of more than 15,000 employees across several divisions in 2025, making it one of the largest job cuts in the company’s history. This move is part of a broader plan to shift the company’s focus towards artificial intelligence (AI), which Microsoft considers vital for its future growth.
The layoffs happened in several stages during the year. The most recent round saw about 9,000 workers leaving, while earlier cuts affected around 6,000 employees, mainly from the Xbox gaming unit and traditional sales teams. The company wants to reshape its workforce so it can keep up with the fast-growing AI sector, which is now central to how Microsoft operates.
Microsoft’s leadership has made it clear that learning AI skills is now essential for everyone at the company. Julia Liuson, President of Microsoft’s Developer Division, said in an internal message that “using AI is no longer optional — it’s core to every role and every level.” Managers have been told to assess employees on how well they use Microsoft’s Copilot AI tools, and there are plans to introduce official AI usage targets in upcoming performance reviews.
This shift is not just about saving money. Microsoft has invested heavily in AI infrastructure, and these investments have already brought in significant savings. For example, AI-powered solutions in Microsoft’s call centres saved the company over $500 million last year, while also making service better. AI is also being used to automate coding, with CEO Satya Nadella sharing that AI now writes between 20% and 30% of the company’s codebase.
With this new focus, Microsoft is setting higher standards for hiring and employee performance in the technology sector. The company’s message to its remaining staff is clear: learning AI skills is crucial for career growth and job security. Employees who adapt to using AI tools will be better prepared to contribute to innovation and the company’s future success.
While the layoffs have been tough for those affected, Microsoft has promised that impacted workers will receive support and benefits as per local laws and company policies. For those staying with the company, training in AI and skill development will become a key part of their roles, showing Microsoft’s commitment to leading the industry in the AI era.
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