Microsoft has reportedly begun another round of layoffs this week, though the company is keeping unusually quiet about the scope and scale of the cuts. Multiple sources within the company have confirmed to me that the reductions began yesterday (May 12, 2025) and continued through today, primarily affecting the cloud computing and AI divisions - ironically, the very areas Microsoft has touted as its future.
This marks the third significant workforce reduction at Microsoft in the past 18 months. While the company hasn't made an official announcement (and declined my request for comment), employees have been sharing their experiences on LinkedIn and tech forums. One senior developer who was let go after 7 years with the company told me the cuts "came out of nowhere" and that his entire team was dissolved with little explanation.
The timing is particularly strange given Microsoft's strong Q1 earnings report just three weeks ago, where CEO Satya Nadella highlighted "continued momentum in our AI solutions" and projected double-digit growth for Azure.
So what's really going on? In my experience covering tech for the past decade, these kinds of selective cuts often signal a strategic realignment rather than financial trouble. Microsoft might be trimming what it sees as redundant positions following its recent acquisitions - the company has purchased four AI startups since January.
Industry analyst Joanna Stern suggests another possibility: "There's growing pressure from the board to improve margins ahead of potential regulatory challenges. Cutting high-salary technical positions - even in growth areas - delivers immediate financial results."
For employees caught in the crossfire, the reasoning probably doesn't matter much. And for the tech industry as a whole, Microsoft's moves often presage similar actions across the sector. I wouldn't be surprised to see other tech giants announce their own "strategic realignments" in the coming weeks.
