Why is Microsoft laying off 4,800 employees and who will be affected?

Microsoft on Monday announced plans to lay off around 4,800 employees, or about 2.1% of its global workforce.

The latest job cuts come at the start of Microsoft's new fiscal year, a period when the company has traditionally undertaken workforce restructuring. Last year, it eliminated 6,000 jobs in May and another 9,000 positions in July.

Before the latest announcement, Microsoft employed more than 220,000 people globally.

In an email to employees, Microsoft's Chief Human Resources Officer Amy Coleman said the company was "focusing our people, investments, and energy on the priorities that will keep Microsoft positioned to deliver for customers in a fast-changing industry."

She acknowledged that the affected employees had made "meaningful contributions" to the company and said Microsoft would provide financial support and other resources to help them transition.

Coleman said the company had been trying to minimise job losses by redeploying employees wherever possible.

Over the past year, Microsoft shifted more than 4,000 employees into new roles, including 500 this month, she said.

The company will also transition four gaming studios to operate independently under new management, while more than 30% of eligible employees opted for its recent voluntary retirement programme.

Explaining the rationale behind the restructuring, Coleman said the technology industry was undergoing rapid change, requiring Microsoft to realign resources, roles and organisational priorities.

"Our business is changing because the world around it is changing. The way technology is built, deployed, and used is transforming faster than at any point in my time here," she wrote. "Our customers' needs are shifting, the business models that serve them are shifting, and that means the work itself — what we do, where we focus, and how we're organized — has to transform too."

Coleman clarified that the latest layoffs were not a result of artificial intelligence replacing workers.

"I also want to be direct that the roles eliminated today are not being replaced by AI," she said. "At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves."

She said the restructuring would primarily affect Microsoft's Commercial and Xbox businesses.

The Commercial division is being reorganised following the company's recently announced "Frontier Company" initiative, while the Xbox business is being restructured for long-term growth.

Engineering teams across the company will also continue to evolve their structures and priorities to better meet customer needs, she added.

Coleman said Microsoft expected further organisational changes in other parts of the business as it continued adapting to shifts in technology and customer demand.