Microsoft to Cut 20000 Jobs Immediately — Here's Why AI is the Main Culprit

In terrible and shocking news, Microsoft is reportedly preparing to carry out one of the largest job cuts in its history, with plans to eliminate up to 20,000 roles immediately, and this will affect a lot of the global technology sector.

This decision comes even after the company remaining highly profitable and continuing to dominate many areas such as cloud computing, enterprise software and gaming. According to reports, the layoffs are expected to go across multiple departments and regions, affecting teams linked to sales, engineering, cloud services and even high-profile divisions like Xbox.

So, while cost control and post-pandemic overhiring are familiar explanations in Big Tech, this round of cuts appears to be caused by something much more structural. AI, which is now becoming the future of productivity and innovation, is completely changing how companies like Microsoft operate, who they employ and which roles are deemed essential.

Microsoft's Latest Job Cuts and the AI Connection

AI replacing humans is becoming a nightmare in the past few years. The contemporary labour market in the tech sector has been in chaos, and Microsoft now appears to be going through a whole plethora of workforce reductions.

A new report stated that the company is preparing to eliminate up to 20,000 roles by the end of January 2026, a number that could be as much as 5 to 10% of its approximately 220,000-strong workforce, as per Microsoft official numbers.

Moreover, this round of lay-offs is not entirely unexpected because Microsoft, like many other big tech firms, has already carried out repeated cuts throughout 2025, with around 15,000 jobs cut in the previous year alone. The force behind these reductions has been a great importance on AI and cloud computing, where Microsoft sees its future growth.

Furthermore, sources say that rising costs associated with AI development and infrastructure are a huge factor behind the cuts. Microsoft has been pouring money into data centres, AI tools, and cloud computing services at an unprecedented rate, with expected capital expenditures exceeding $80 billion (which is around £62 billion) for the year as per reports. It seems many of the affected roles are believed to be in the Azure cloud teams, gaming units such as Xbox, and global sales organisations.

Microsoft's CEO, Satya Nadella, has reportedly given a vision of the company as being AI-first in many ways, and company communications over the past year show this change in corporate culture.

Read More: After Apple, Google Could Now Be Fined Hundreds of Millions Unless It Makes This Change

Read More: After Massive Layoffs, IBM Spends £8.9 Billion to Acquire Confluent - Here's Why

How AI is Causing Layoffs Across Big Companies

This worrying trend at Microsoft is not isolated. Across the technology and corporate world, large scale layoffs have become super common, and AI technology is often named as either a direct or indirect factor. According to a shocking report, over 100,000 jobs were cut in the tech sector in 2025, with companies such as Amazon, Intel, Google, Meta, and Salesforce all making significant workforce reductions.

For instance, Amazon announced up to 30,000 job cuts, with much of the restructuring connected to the company's mission to better operations while investing in automation and AI infrastructure. Intel has planned reductions of around 24,000 jobs as it adapts to an AI-centric future. Salesforce eliminated 4,000 customer support roles, saying automated systems now handling about 50% of interactions that were previously managed by human staff.

In many of these cases, executives have openly acknowledged that AI and automation are reshaping their business models.