Microsoft is laying off more than 6,000 employees in an effort to streamline its corporate ranks.

The Redmond, Washington-based software giant said Tuesday that the layoffs, which will affect almost 2,000 workers in Washington state, are meant in part to strip away layers of management and create more nimble teams.

Sound familiar?

Microsoft isn't alone in this strategy. It's the same reasoning Starbucks CEO Brian Niccol gave when Starbucks laid off more than 1,000 corporate workers and removed hundreds of open roles. Amazon CEO Andy Jassy said last year that the company was working to lower the manager-to-employee ratio.

Tuesday's layoffs were the largest at Microsoft since January 2023, when the company started culling its ranks by 10,000 through the following few months. But the tech sector was in a different position then; the decade leading up to the pandemic saw furious growth, with employment skyrocketing from 2020 through 2022, before stalling in late 2022.

In Washington state alone, software publishing jobs grew from about 55,200 in March 2015 to a peak of 88,400 in March 2023, according to Anneliese Vance-Sherman, a chief economist with the state Employment Security Department. That's not even the full scope of the tech sector, as employees at tech companies like Amazon can be classified as retail or professional business services workers.

Tech job growth stalls

Since March 2023, employment in software publishing has remained relatively flat outside of a small rebound or dip here and there.

"We saw remarkable, sustained growth until that peak in 2023," Vance-Sherman said. "The pandemic is really relevant when we're talking about high-tech industries. We were sending workers home, changing the way we shop and live and we adopted a lot of information technology at an accelerated rate."

The near-plateau in the data, to Vance-Sherman, shows maturity in the job market cycle. Fewer jobs are opening as fewer people and companies race to adopt new technology.

Tech companies like Microsoft, Amazon and Meta, all of which laid of tens of thousands of employees in late 2022 through 2023, framed the workforce reductions as righting the ship. Some had over-hired during the pandemic and rising costs colored earnings reports, upsetting Wall Street.

The market is different for Microsoft in 2025, despite the Trump administration's topsy-turvy trade policies. Stock prices for all tech companies suffered after the president's April 2 announcement of sweeping tariffs. Microsoft was hit the least, however, especially compared with companies like Amazon and Apple that rely on imported goods.

Microsoft also took over the title of world's most valuable company from Apple not long after the announcement. A stock surge gave Apple the lead back. But on May 2, Microsoft regained the crown and has held on since, with a market capitalization of $3.34 trillion as of Tuesday.

During the latest round of quarterly earnings in late April, with tariff turmoil looming over financial results, Microsoft posted results that exceeded Wall Street expectations. For the first three months of 2025, the company reported more than $70 billion, with $25.8 billion in profit. Microsoft also predicted strong results for April through June, projecting more than $73 billion in revenue.

But the company is pumping billions of those dollars into artificial intelligence infrastructure, namely data centers, that won't make a return on investment in the immediate future.

Microsoft plans to spend more than $80 billion in capital expenditures — costs attributed to investments, not daily operations — on AI infrastructure during its 2025 fiscal year, which ends June 30.

AI costs rise

Jean Atelsek, a senior research analyst for S&P Global Market Intelligence, said the connection between a heavier investment in AI and layoffs isn't as simple as workers being replaced by automation. It's more likely companies are cutting costs to justify the dollars pumped into AI.

"I think there is some justification in removing layers of management," said Atelsek, who covers cloud computing companies for S&P Global's tech group 451 Research. "But I also think they are cutting costs like crazy to keep their margins intact in light of rapidly growing capital spending."

She also wouldn't discount Microsoft's reason for the layoffs, namely creating more agile teams and restructuring the balance of managers to developers in favor of more of the latter.

"People are talking about the AI transition as being as significant as the server to cloud transition," Atelsek said. "So realigning teams for that seems like a justified reason."

Microsoft Chief Financial Officer Amy Hood hinted at the restructuring during the company's earnings call April 30. When addressing the company's margins, Hood said Microsoft was focused on "building high-performing teams and increasing our agility by reducing layers with fewer managers." The company's total head count was 2% higher at the end of March than a year previous, but slightly down from the end of December.

As of Tuesday evening, Microsoft hasn't officially announced layoffs to employees. In 2023, CEO Satya Nadella announced cuts in a Microsoft blog and a memo sent companywide.

The layoffs aren't focused in any single organization or geographic location. Cuts hit Microsoft subsidiaries LinkedIn and GitHub as well.

GitHub CEO Thomas Dohmke addressed employees Tuesday and said he'll host an "ask me anything" session on Thursday, according to internal communications viewed by The Seattle Times.

"Earlier today, we said goodbye to a number of Hubbers," he wrote, referring to GitHub employees. "I know this moment brings uncertainty, fear, and anxiety. ... While I can't answer every question, I will do my best to provide as much clarity as possible."

Scott Hanselman, vice president of Microsoft's developer community, wrote on LinkedIn that it was a "day with a lot of tears," and the first time he's had to lay people off to support business goals that weren't his own.

"I often have trouble separating my beliefs with the system that I participate in and am complicit in," he wrote. "These are people with dreams and rent and I love them and I want them to be OK."

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