Microsoft Reportedly Lays Off Over 1,500 Employees in Cloud Sector as Partnership with OpenAI Strengthens Alphabet also reportedly laid off employees from several teams in Google's cloud unit last week.
By Emily Rella
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More layoffs are reportedly in order for Microsoft as the tech behemoth and other companies in the tech sector focus on reorganization amid a changing landscape.
Citing people familiar with the situation, Microsoft will be laying off hundreds, if not thousands, of employees in its Azure cloud sector, per Business Insider.
Over 1,500 employees in the Azure for Operators organization were reportedly let go, with hundreds more in the Mission Engineering sector also affected.
Related: Microsoft Is Separating Teams From the Rest of Office 365
"Organizational and workforce adjustments are a necessary and regular part of managing our business. We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners," a Microsoft spokesperson told Reuters in a statement regarding the layoffs.
The company did not publicly confirm the total number of affected employees.
Microsoft has seen its Azure cloud business skyrocket, thanks to a partnership with OpenAI, which was extended in January as an ongoing collaboration set to last years with billions of dollars invested.
In January 2023, Microsoft laid off an estimated 10,000 workers with another round of 1,900 employees let go in the company's Activision Blizzard and Xbox divisions.
Microsoft disclosed a 17% year-over-year increase in revenue in the company's Q3 fiscal 2024 earnings report, which came in at $61.9 billion, and a 23% increase in operating income during the same period at $27.6 billion.
"Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry," said Satya Nadella, chairman and CEO of Microsoft, at the time.
Related: Microsoft Invests Billions in OpenAI, Creator of ChatGPT
As of March 31, 2024, Microsoft had an estimated 221,000 employees worldwide.
The company was up 23% over a one-year period as of Tuesday afternoon.
Google also lays off Cloud employees
CNBC reported Monday that Alphabet has also laid off hundreds of employees in its cloud division, citing internal documents.
"As we've shared before, we continue to evolve our business to meet our customers' priorities and the significant opportunity ahead," a Google spokesperson told CNBC. "We maintain our commitment to investing in areas that are critical to our business and ensure our long-term success."
Some of the employees that were let go included recent hires and at least one employee who had yet to finish their onboarding process.
This follows a round of unspecified layoffs in April where the tech giant reportedly cut jobs across its real estate and finance divisions as part of a cost-cutting initiative.
"Throughout the second half of 2023 and into 2024, a number of our teams made changes to become more efficient and work better, remove layers and align their resources to their biggest product priorities," a Google spokesperson told Reuters, at the time.
