What did Microsoft announce in July 2026?
Microsoft said it will lay off about 9,000 employees at the start of its 2026 fiscal year. The cuts affect less than 4% of its global workforce across different teams, geographies, and experience levels, according to CNBC.
"We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace," a Microsoft spokesperson said in an email to CNBC.
The announcement came on the second day of Microsoft's fiscal year 2026. Microsoft executives have a pattern of announcing reorganizations at the start of a new fiscal year.
Which roles and divisions are affected?
The cuts span sales, consulting, and Xbox gaming positions. Business Insider Africa reported that some affected employees will be offered new roles immediately.
Xbox layoffs had been expected since new gaming CEO Asha Sharma sent a memo to employees calling for a "reset" of the business. Microsoft is also looking to reduce the number of layers of management, as it did during the May 2025 round.
Sales employees with commission-based compensation were excluded from the earlier voluntary retirement buyout offer, per an internal document viewed by Business Insider.
How does this compare to Microsoft's earlier 2025 layoffs?
Here's a timeline of Microsoft's recent workforce reductions:
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| Date | Action | Scale |
|---|---|---|
| January 2025 | Performance-based cuts | Less than 1% of headcount |
| May 2025 | Broad layoffs | More than 6,000 employees (~3%) |
| June 2025 | Additional cuts | At least 300 employees |
| July 2025 | Major fiscal-year round | About 9,000 employees (~4%) |
| April 2026 | Voluntary retirement buyout | ~8,750 eligible US employees |
| July 2026 | Current round | Thousands, less than 2.5% of 220,000 |
Business Insider Africa noted this current round is expected to be smaller than last year's July cuts, projected at less than 2.5% of the company's 220,000-person workforce.
What was the Microsoft "Rule of 70" voluntary buyout?
The Rule of 70 is a voluntary retirement formula Microsoft used for the first time in its 51-year history. It targets US employees at senior director level and below whose age plus years of service add up to 70 or more.
Microsoft announced the program on April 23, 2026. It made roughly 8,750 US employees eligible — about 7% of its 125,000-person US workforce — according to KORE1's reporting on the program. Eligible employees received notifications on May 7 and had a 30-day window to decide.
About one-third of eligible employees accepted the buyout, in line with company expectations. That uptake allowed Microsoft to cut a smaller percentage of its workforce in this July round compared to last year, per Business Insider's sources.
Why is Microsoft cutting jobs now?
Microsoft is reining in costs as it increases spending on AI. The company has also faced pressure from Wall Street over concerns that AI could replace some software services, including potentially some Microsoft offerings.
Microsoft's stock slumped about 19% in the past month before this announcement — its worst monthly performance since the dot-com era, per Business Insider Africa. As we read the reporting across these sources, the cost-control moves and the AI spending ramp are the two factors every outlet ties together.
The company's AI infrastructure spending is the backdrop for each of these workforce decisions. Builders tracking the broader AI compute buildout will recognize this pattern — large tech firms are simultaneously expanding AI capacity and trimming headcount in non-AI functions.
How big have Microsoft's historical layoffs been?
For context, Microsoft's largest single layoff came in 2014, when it eliminated 18,000 positions after acquiring Nokia's devices and services business. In 2023, it cut 10,000 employees. The current July 2026 round, at roughly 9,000, is comparable in scale to the July 2025 round but is a smaller percentage of the current workforce.
The tech industry's AI pivot is reshaping headcount decisions across major companies, not just Microsoft. Similar cost-versus-investment tensions have appeared at other large tech firms tracking emissions and infrastructure costs tied to AI data centers.
Frequently asked questions
How many employees is Microsoft laying off in July 2026? Microsoft is laying off about 9,000 employees. This affects less than 4% of its global workforce, according to CNBC. Business Insider Africa reported the cuts are projected at less than 2.5% of the company's current 220,000-person workforce. The announcement came on the second day of Microsoft's fiscal year 2026, following the company's pattern of announcing reorganizations at the start of a new fiscal year.
What roles are being cut in Microsoft's July 2026 layoffs? The cuts affect sales, consulting, and Xbox gaming positions, among others. Microsoft is also reducing management layers, as it did in the May 2025 round. Some affected employees will be offered new roles immediately, according to sources cited by Business Insider Africa. Sales employees on commission-based plans were excluded from the earlier voluntary retirement buyout but are included in this broader round.
What was Microsoft's Rule of 70 voluntary retirement program? Microsoft's Rule of 70 is a voluntary retirement buyout — the first in the company's 51-year history — offered to US employees at senior director level and below whose combined age and years of service total 70 or more. About 8,750 employees, roughly 7% of Microsoft's 125,000-person US workforce, were eligible. Notifications went out May 7, 2026, with a 30-day decision window. About one-third of eligible employees accepted.
Why is Microsoft cutting thousands of jobs while investing in AI? Microsoft is cutting costs in some areas to fund increased spending on AI. The company has faced Wall Street pressure over concerns that AI could replace certain software services. Its stock fell about 19% in the month before the announcement — its worst monthly drop since the dot-com era — according to Business Insider Africa. The layoffs are framed as organizational changes to position the company for a shifting market.
How do Microsoft's 2026 layoffs compare to previous years? In July 2025, Microsoft cut about 9,000 employees, or roughly 4% of its workforce. In May 2025, it cut more than 6,000. The current July 2026 round is expected to be smaller in percentage terms than last year's July cuts, partly because the voluntary buyout program reduced the need for forced separations. Microsoft's largest-ever layoff was 18,000 in 2014 following the Nokia acquisition.
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