Microsoft is kicking off its fiscal year by laying off thousands of employees in the largest round of layoffs since 2023, the company confirmed Wednesday.

In an ongoing effort to streamline its workforce, Microsoft said as much as 4%, or roughly 9,000, of the company’s employees could be affected by Wednesday’s layoffs. It’s unclear how many are based in Washington.

Microsoft said the cuts would include multiple divisions across the company but did not specify early Wednesday which teams would bear the brunt. Reports over the past two weeks from Bloomberg said sales and marketing employees, as well as gaming workers, would be heavily affected.

The Verge reported Wednesday that Xbox chief Phil Spencer confirmed to employees that the gaming division would be hit. The cuts would, Spencer said, “end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.”

Wednesday’s move follows two waves of layoffs in May and June, which saw Microsoft fire more than 6,000 employees, almost 2,300 of whom were based in Washington.

During May’s round of layoffs, Microsoft emphasized that it wanted to flatten management layers. But data from Washington state showed only about 17% of the cuts in Redmond were designated as managers.

Microsoft had over 228,000 employees worldwide as of June 2024.

Wednesday’s round of layoffs is about a thousand employees shy of a 2023 layoff announcement, when Microsoft let go of 10,000 employees. But Microsoft’s workforce reductions so far in 2025 as a whole appear to have cost over 15,000 employees their jobs.

As Microsoft cuts corporate ranks, the company is investing heavily in artificial intelligence.

Microsoft’s push into AI doesn’t mean the company is replacing workers with the technology. Rather, the significant cost of building out the infrastructure over multiple years has Microsoft looking to trim costs where it can.

During the company’s 2025 fiscal year, which ended on Monday, Microsoft said it planned to spend more than $80 billion on infrastructure to meet AI demands. That’s a $25 billion increase in capital expenditures from the company’s 2024 fiscal year.

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