Microsoft plans thousands of job cuts next month, and these employees are likely to lose their jobs

Microsoft

is preparing to eliminate thousands of jobs primarily targeting its sales division, with the cuts expected to be announced in early July as the company continues restructuring amid massive AI investments, according to people familiar with the matter.The layoffs will mark the third major workforce reduction this year for the Redmond-based tech giant, following 6,000 cuts in May and over 300 additional eliminations just weeks later. Bloomberg first reported the planned summer layoffs, with sources indicating the timing coincides with the start of Microsoft's new fiscal year beginning in July.

Sales teams face heaviest impact at Microsoft

Unlike previous rounds that primarily affected software engineers and product developers, the upcoming cuts will disproportionately target customer-facing roles. Microsoft's sales and marketing division employs approximately 45,000 of the company's 228,000 total workforce as of June 2024.

The company signaled this shift in April when it announced plans to use third-party firms to handle more software sales to small and mid-sized customers. Sources told Bloomberg the reductions won't exclusively affect sales teams, though they will bear the brunt of the cuts.

AI spending drives cost-cutting measures

Microsoft's layoffs reflect the broader challenge facing tech companies balancing AI investments with operational efficiency. The company has allocated roughly $80 billion for data center spending this fiscal year while executives have pledged to Wall Street to control costs in other areas.CEO Satya Nadella recently described earlier cuts as a "realignment" rather than performance-based decisions, telling employees at an internal town hall that "this was not about people failing. It was about repositioning for what comes next."The timing follows a pattern for Microsoft, which often announces organizational changes near the end of its fiscal year. The company previously eliminated 10,000 positions in January 2023 after pandemic-driven hiring, and made additional cuts to its videogame division following the Activision Blizzard acquisition.Microsoft declined to comment on the planned layoffs, with the final number of cuts still being determined according to sources familiar with the matter.