Did AI lead to massive layoffs at Microsoft?

After laying off nearly 15,000 employees in various wings this year, Microsoft has urged its remaining workforce to enhance their AI skills as the company is integrating AI usage into performance reviews. In 2025 alone, the tech giant has conducted at least four major rounds of attrition were implemented.

In the latest round, over 9,000 jobs were impacted in the Xbox gaming division and the sales team. In May this year, over 6,000 positions were laid off and several hundreds more in June.  

In the latest rounds of layoffs, the company mainly targeted the traditional salespeople. It is learnt that they would be replaced with more technical solutions engineers having the ability to demonstrate AI tools directly to customers.

Confirming the importance given to AI usage, Julia Liuson, president of Microsoft’s Developer Division, instructed the company’s managers that AI should be part of holistic reflections on an individual’s performance and impact. In the internal mails, she even declared that using AI is no longer optional, it’s core to every role and every level,” according to a report in Business Insider. 

The Redmond tech giant is contemplating to add formal AI usage metrics to performance reviews, in the wake of the thrust it is giving to Copilot AI services. Sales chief Judson Althoff outlined plans to become the Frontier AI Firm and establish a Copilot on every device in every role.

The company’s increased thrust on AI is due to an investment of $80 billion on in AI infrastructure this fiscal year. However, the company says it is streamlining operations to balance costs while considering to vouch for AI dominance in the long term.