Microsoft to cut thousands more jobs, mainly in sales

Microsoft is set to cut thousands of jobs, mainly in sales, amid growing fears that AI advances are accelerating the replacement of human roles across the industry, Bloomberg reports.

The cuts follow a previous round in May, which saw approximately 6,000 roles eliminated.

Microsoft has been ramping up its AI investments to strengthen its position as enterprises across industries rush to integrate the technology into their operations.

Earlier this year, the company announced plans to spend around $80 billion in fiscal 2025, largely on building data centers to support AI training and cloud-based applications.

Adding to industry unease, Amazon CEO Andy Jassy said this week that generative AI and AI agents are expected to shrink the company’s corporate workforce over time.

AI or other factors?

AI is being used as an excuse for layoffs this year, but there may be more to it than what meets the eye.  

“One, we are still rebalancing employee counts from the over-hiring of the past decade,” said Hyoun Park, CEO and chief analyst of Amalgam Insights. “Tech companies were hiring with the assumption that they would grow at ridiculous rates that have not come to pass. Also, some tech companies think they can simply get rid of salespeople, especially in cash-cow industries where renewals seem to come in with little to no effort. Whether that is actually true or not, we are about to find out.”The job cuts may also signal concerns about the near-term revenue potential of AI, Park said. While Microsoft is under pressure to invest heavily in AI to sustain its stock valuation, it may be turning to short-term operating expense reductions to support its financial performance.

“The planned $80 billion investment in AI infrastructure is especially interesting because those numbers assume a massive number of people will adopt Microsoft-related AI products,” Park said. “Are 50 million+ people willing to pay an additional amount on Microsoft products to support AI? That is a massive bet that has been completely unjustified by the current AI market today.”Others point out that the company is betting on a long-term inflection in enterprise workload patterns driven by GenAI, but current adoption patterns remain volatile.

“Reports of Microsoft pausing or renegotiating data center leases reflect a prudent but necessary response to these uncertainties,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “If workloads fail to scale or regulatory barriers increase, Microsoft, and by extension, other hyperscalers, could face underutilized infrastructure, prompting pricing recalibrations or service tier stratification.”

Changing sales environment

The focus on sales roles in the planned cuts is notable, with analysts saying it reflects a broader shift in how enterprise sales functions are evolving.

“The rise of AI copilots, telemetry-rich self-service portals, and data-driven journey mapping is reducing the need for large in-region sales teams,” Gogia said. “Microsoft’s realignment is part of a broader pattern also visible in Amazon, Google, and Salesforce.” However, while AI can personalize interactions at scale, it lacks the relational depth required in strategic deal-making, compliance negotiation, and multi-stakeholder orchestration, Gogia added.