Microsoft is preparing for significant workforce reductions scheduled for January 2026. Estimates suggest the cuts will affect between 11,000 and 22,000 employees, representing 5% to 10% of the company’s total workforce.
The anticipated layoffs are scheduled for the third week of January. Divisions expected to be impacted include Azure Cloud Operations, the Xbox gaming division, and Global Sales. These potential cuts follow a turbulent 2025, during which the company already eliminated over 15,000 positions.
The restructuring serves as a strategic move to advance Microsoft's AI transformation. The company plans to reallocate funds from payroll to support this initiative.
This strategy aligns with CEO Satya Nadella’s view that Microsoft’s size is a disadvantage in the fast-paced AI landscape, necessitating a flatter corporate hierarchy. To support these ambitions, the company has significantly increased its capital expenditures on AI infrastructure.