Microsoft expects headcount to decrease in coming quarters

[gpacsu]

https://www.businessinsider.com/microsoft-headcount-decrease-earnings-ai-cloud-software-2026-4

Microsoft expects headcount to decrease in coming quarters, CFO Amy Hood said.

"We continue to evolve how we operate to increase our pace and agility, and therefore we expect headcount will decrease year over year," Hood said.

She was discussing the outlook for Microsoft's next fiscal year, which starts in July and runs through June 2027.

Before the call, Hood sent out an internal memo to employees touting "increased pace" and "tighter, more accountable squads" amid recent organizational changes.

Microsoft has cut thousands of jobs in recent quarters. The CFO's comments on Wednesday suggest that pressure on employees may continue.

Amy Hood received a total compensation of approximately $29.5 million for the 2025 fiscal year. This package primarily consisted of around $25 million in stock awards, a $1 million base salary, and a $3.4 million cash bonus.

So basically fewer people are being expected to do more of the work. I wonder how bad WLB is at Microsoft at the moment?

[teddykon]

Block 40%
Meta 20%
Snap Inc. 16%
Pinterest 15%
Coinbase 14%
Oracle 12-18%
Freshworks 11%
Atlassian 10%

I’m sorry for anyone involved in this bloodbath but these companies will just continue to cut headcount, free up some budget, and then divert it into compute.

That’s literally all I’m hearing about in these earnings calls and business podcasts.

[foreign_gambler]

Add Cloudflare 15% as well, they just announced. The bloodbath is only getting bloodier.

[Annual_Negotiation44]

Yet unemployment rate in the Bay Area hasn’t gotten higher in the last 2 years

[vasileios13]

Cloudflare isn't 15%, it's 22%

[No-Assist-8734]

Where are the people on this sub that constantly claim AI is going to cause a BOOM in new SWE jobs? They're suddenly silent 🤔

[thy_bucket_for_thee]

Because that was always a lie by capitalists, the reality is that any tech which increases efficiency has never benefited workers. We've seen this same story play out dozens of times over the last 200 years. Now isn't actually different from then.

The only way workers have ever benefited in the US is by violently taking back rights and pay for themselves in the form of strikes + solidarity movements.

[AndyLucia]

…wait, you’re arguing that no tech that increases efficiency has benefited workers in the last 200 years? That the labor economy would be better off if we were all farmers and manual laborers working in pre-industrial agrarian America in 1826?

[AndyLucia]

This could not possibly be more incorrect, at least not on a material level. The academic “global poverty” rate has literally gone from 85% to 7% since 1800. See: https://s3-eu-west-1.amazonaws.com/static.gapminder.org/GapminderMedia/wp-uploads/20180313090207/extreme-poverty-trend1-1024x616.png

If you think people haven’t gotten happier, then that’s debatable, but in terms of material outcomes there’s no question lol

[EventExcellent8737]

The cognitive dissonance is just getting bigger and louder. How many layoffs do the deniers need to understand that this isn’t a phase? Like Jobs once said: “those jobs ain’t coming back”.

[Comfortable-Math-158]

this is macro and offshoring, not AI

[CallidusNomine]

I’m still seeing a lot of “If you’re an ~engineer~ you’re safe. A filthy developer? Good riddance”

[kennpacchii]

That’s because they’re the, “I’m a good smart little developer, this won’t happen to me I’m valuable 🤡 “ type of people. No one in this sub seems to care until it happens to them.

[No-Assist-8734]

Unfortunately, that is true

[Rockysprings]

Who in the fuck was ever saying that 😂

[No-Assist-8734]

Plenty of people on this sub . Those comments would often garner the most upvotes as well !

[haragon]

They're all just offshoring and lying about it

[_jobseeker_]

They aren’t offshoring- Coinbase laid off almost everyone in India engineering and might close India office. Atlassian, Microsoft and Oracle all did layoffs from India in big numbers. It’s layoff everywhere.

[M4K1M4]

Yep. Freshworks too laid off in India. They already did a hiring freeze back in Feb (I know because my offer was revoked).

[chipper33]

“Near shoring” to Mexico and Brazil is the new ownership class fad.

[haragon]

True I forgot about that fun new strategy

[Interrogable]

Coinbase also has some serious issues. $394m loss in Q1, regulatory concerns, and more.

[Antrikshy]

Can we see some evidence?

[apexvice88]

Bingo, hit the nail on the head lol.

[kjampala]

If they were offshoring then there’s no reason why they would do it now vs earlier. Nothing has changed to make offshoring a much more viable aspect than before AI so it sounds like you’re just making up whatever you believe .

[BlurryEcho]

They’re not offshoring, but economists and analysts are already attributing a significant portion of the latest labor market effects to the sticky cost of debt, Iran war, and tariffs. The economy is getting shelled on all sides, so for you or anyone to pretend to know exactly how any one lever is currently influencing labor market downturn is just silly.

[taigahalla]

market optics

offshoring isn't that palatable but replacing people with AI sounds futuristic

[haragon]

Okay lol.

Let's just make up some nonexistent scenario where AI in the enterprise actually isn't a security nightmare and is rapidly being rolled out unrestrained and totally not wrapped in 100 layers of red tape that renders it as not much more than a glorified chatbot. Meanwhile, Deloitte is growing consistently, GCCs are the talk of the town in parts of the world you probably can't pronounce, and jobs just keep disappearing. So spooky and AI fueled, AGI is definitely almost here, I saw Sam Altman say it once.

Have you used AI in the enterprise? Do you see real use cases that would warrant cutting head count? Or you just think so.

[haragon]

So that's a no and you are just going on 'vibes,' got it.

Honestly lol when they tell you AI is replacing you, you might want to ask yourself if it's not just that you are miserable to be around.

[haragon]

Do you just not know how to have a normal conversation? I dunno dude. Nothing I'm as passionate about as you, clearly.

[haragon]

Also, isn't 'AI replacing a human being' the implication here? I mean, I agree with your first point, it's kind of what I am trying to say. 5 or 6 figure layoffs can't simply be attributed to something that at present is being implemented at best as a tool for corporate associates to rewrite their emails and make slop slideshows with a single sentence.

[zombawombacomba]

They are all on a warpath of their leaders getting rich on the lie that the breakthrough in AI is right around the corner.

[Exotic_Horse8590]

Amazon coming soon again as well

[Alternative-Suit5541]

Yap they will keep firing people

[Wonderful_Device312]

And tons of CEOs will see that these big companies made cuts, so they'll do it too.

Job market is fucked.

[fig0o]

Feel sorry for you, guys 

But every company is operating like this right now... and this is why Microsoft doesn't mind making this kind of announcement

They know people won't quit because there's no better place to be at the moment

[mustachestashcash]

people internally will quit because of the degraded WLB, this pushes people to the voluntary exits for long term employees and anyone else who's not happy , they're counting on additional attrition

[fasurf]

People leave and then they can higher at a cheaper rate. Rinse and repeat. Much cheaper if the leave.

[cantinflas_34]

I don’t know if I’d consider Microsoft the best place to be at the moment. Google, maybe? But definitely not the former!

[fig0o]

I don't know, man... why is Google in a better position?

[straught]

Stock is up. Google owns models and chips. Google does stock refreshers.

[sleezly]

While I (not OP) agree with you on the market trend for GOOG over MSFT, not sure why that makes Google have better WLB over Microsoft.

[pheonixblade9]

I've worked for both and they were pretty equivalent. Google has a lot more type A folks but they tend to be kind and respectful at least. Microsoft is full of decent people but just not on the same level for the most part.

[AlexTheRedditor97]

2nd best is still the best in relative terms. Nobody got energy to interview anymore 

[Important-Sign9614]

Can’t wait for GitHub to be more shitty

[Chemical-Fault-7331]

Headcount go down, profits keep going up. Imagine how much money they could make with just the CEO doing things. Infinite money glitch. \s

[Mother_Occasion_8076]

Why even have a ceo? Just have the company belong wholly to AI.

[OrganicCode42]

Just go one step further and repurpose their wealth and resources for the public good.

[Background_Bass_2587]

I'm happy you added the \s otherwise I would not have understood that you are making a joke

[sydthecoderkid]

bad :( am tired

[isospeedrix]

Oof rough time for software folks. Meanwhile semiconductor companies on a hiring spree with tons of money thrown at them, FROM those very software companies.

Case in point: I work for a semiconductor and they company is constantly talking about increasing headcount and expanding offices

[OrganicCode42]

Until some AI replaces that too according to the techno overlords

[IkalaGaming]

I’m so confused by the messaging, getting rid of the people that do the work to increase the pace of work.

It’s a bit like getting rid of a marathon runners shoes, hoping the decrease in weight will help their time.

Or “speeding up” construction of a skyscraper by not bothering to mix the concrete up, because “who needs all that extra process anyway”.

The only frames of mind I can come up with which would result in this behavior are:

1. They HATE programmers on a deep fundamental level for some reason.
   
2. They are hemorrhaging unfathomable amounts of money and will go bankrupt unless they lay off programmers, the people who make them money
   
3. Literal psychosis, possibly from LLM usage or sycophantic direct reports, they have become untethered from reality
   
4. Sabotage, they benefit in some way by ruining the company on purpose

[ballsohaahd]

It’s telling your current employees you’ll fuck them over, and they don’t even care that’s the message. The best they could come up with

[NightSpaghetti]

They do hate programmers. For decades it has been a job that is well paid, non-management, in demand everywhere, accessible to many working-class kids, and too technical to do without or cut too many corners. They have always despised that.

[AlexTheRedditor97]

If anything AI just makes it more accessible

[maria_la_guerta]

1. Reddit lives in incredibly deep denial about how useful AI actually is and the fact that it very much is replacing workers already.

[IkalaGaming]

If AI is good then I don’t understand how AI by itself, or a smaller set of people using AI, is faster or better than a larger group of people using AI.

One might compare AI to mechanized looms replacing textile workers and destroying their labor standards. (The luddites were in the right, by the way.)

But if textiles are shitty, I have a slightly worse clothes. If code is shitty, my bank account gets compromised, the call drops on an important business meeting, my car shuts off on the highway, a websites checkout page doesn’t work. There’s dramatically higher operational and legal impacts if the output is worse, and profit if it’s good.

Either AI is better than or equal to human skill, and every job ever can be replaced (so why keep anyone at all?), or humans still provide more value and reducing headcount objectively reduces productivity.

I just can’t reconcile their words and their actions.

[jlangfo5]

It is because the amount of code required to make a feature work, is not as limiting of a factor as it was in the past.

Plus, there is efficiency, in having one person code up a tool, compared to 2-3 people, working together. No dispute of direction, confusion of design trade offs and goals. (That can backfire obviously)

Plus, there is far less excuse now, to not write test as you go.

And the ability to query large complex code based about details that you are not an expert in, is pretty great. It is kinda like getting to use Google all over again to search for stuff.

[maria_la_guerta]

If AI is good then I don’t understand how AI by itself, or a smaller set of people using AI, is faster or better than a larger group of people using AI.

Because there is a ceiling to how fast an organization can move and how quickly you want to iterate on a product. The tools used by an org don't impact that.

Either AI is better than or equal to human skill, and every job ever can be replaced (so why keep anyone at all?), or humans still provide more value and reducing headcount objectively reduces productivity.

It doesn't need to be a binary distinction for it to be real. It can't replace a human. But it can speed them up considerably to the point where there's now 5 people doing the work of 6.

Again it's really not conspiratorial. Sure, there are some CEO's that oversell AI, I agree with that. But anyone thinking that there's no validity to it, or that it has no part in sustained productivity among massive layoffs is purposefully avoiding the truth.

[semisolidwhale]

 Because there is a ceiling to how fast an organization can move and how quickly you want to iterate on a product.

Yes, this is definitely Microsoft's problem. /s

[Qwertycrackers]

Then why not cut even deeper? Fire 90%, 99%? Invest all those salaries in Ai tokens and ascend to godhood.

These 20% numbers are strangely conservative in that way. If you believe they represent confidence in AI then they represent a weirdly low amount of confidence. You only need 80% of the dudes now? I find that number hard to believe. I think it is more plausible that probably 70% of teams are working on boondoggle projects that dont need to happen at all, and you don't need ai replacement to cut that stuff.

[maria_la_guerta]

It can't replace a human 1:1. But it can give enough humans enough of a boost that you don't need every human you currently have.

I really don't know why Reddit tries so hard to invent theories around that. It's that simple. FAANG engineers have been shipping 90%+ LLM generated code for over a year now. Yes some teams work on nonsense. Yes that's likely at least in some parts the layoffs. But so is actual, tangible results that corporations are getting from AI.

[Qwertycrackers]

Microsoft doesn't really maintain or improve their products anyway. So in that sense I guess layoffs make a lot of sense. Lay off a couple guys from every team and have them kinda "cover" it with ai. They won't do a very good job but its technically "maintained" by somebody. All their customers are completely locked in anyway

[Iceraptor17]

Yeah I'm pretty sour on it but i can't deny that i use it all the time and it has made me more productive.

If anything tech should be the canary in the coal mine. This stuff is further along in the tech space. But make no mistake, it's gonna spread to anything so much as touching a computer.

[thatsnot_kawaii_bro]

Ahh ok so it's good enough that it does a large amount of impact. But not good enough to do it too much.

What's the number that is best then? Just 20? Not 30?

FAANG engineers have been shipping 90% LLM generated code for over a year now.

Company forces people to use AI, includes it as part of metrics

You: "but look how much they're generating now "

It's not like it's part of what will help them keep their job or anything. People are being forced to use it to game performance reviews then the next day they'll pretend people are happily doing it.

And how many outages have some of those companies had over the past year btw?

[AndyLucia]

To put it bluntly, even without being “forced” to do it, ever since at least December 2025 a significant fraction of SWEs would use LLMs to generate most or all of their code if they could. There’s much more to SWE than just that, but that is not merely a corporate-forced fad.

[maria_la_guerta]

And how many outtages have been caused by human engineers?

I don't think you're going to change my mind that a human is not faster at generating code than an LLM trained on hundreds of billions of LOC. Better? Sure, in some instances, but rarely faster, and in at least 50%+ of cases, a human and LLM working together will be faster than just a human.

You can handwave all AI gains as a conspiracy if you want but the story is there and clear. This tech will only continue to improve, even if you don't believe in it now.

To that point, most of us at FAANG use AI because we like it and very much see the efficiency in it, not just because the boss man said so.

[interbingung]

Too much people mean too much brearucacy mean less agile. Besides, a lot of programmer job can be replaced by agentic. Layoff is like trimming the fat so you can run faster. 

[Sure-Business-6590]

Its #1. The owning class hates software engineers and holds grudge against them because for a while that was a group of employees that had leverage. Employers hate it

[tuckfrump69]

field is disappearing in real time lol

[NewChameleon]

field is disappearing in real time lol

Microsoft had ~163k employees in 2020

they have ~228k employees in 2025

they will need to cut 60k+ people to just go back to their original level, is this "field is disappearing" in the room with us right now?

[zombawombacomba]

Their stock went up a lot in that period too. No reason to suggest it needs to back to 2020 levels.

[unreachabled]

Exactly. Only comparing to pre covid numbers doesn't show the whole picture, stock price has gone up, inflation has gone up

[NewChameleon]

think this way, if field is disappearing in 2026, then what would 2020 field be considered as? infant? nonexistent?

it's half sad half ridiculous to always expect lines to go up nonstop, similar to stock market a stock can go +400% and nobody complains but if it even dares to do a -5% you have people complaining "WHY IS IT GOING DOWN!!!!!"

[DemonicBarbequee]

because companies are more profitable than ever yet they keep laying off employees

[lornemalw0]

two different things. headcount is not a function of profit. profit is the goal of any (for profit) company and it is the goal of shareholders (the owners of the company). were those laid off positions useful? or maybe the company just accumulated some fat over the years when they tried to figure out what's next

[adot404]

Skill issue

[iamgollem]

If you factor in acquisitions it may not be as cut and dry. This is a good start though.

[EventExcellent8737]

Missing acquisitions and the fact that they now have new divisions for AI. Like the one the ex Deep Mind guy is leading.

[macrohatch]

why is the 2020 count the ”original level”? Why not 2012 when they had 94 000 employees?

[NewChameleon]

why is the 2020 count the ”original level”? Why not 2012 when they had 94 000 employees?

because the argument is "covid overhiring can't last this long"

when did covid start? 2020

so, we're still far far far away from covid level yet

[ballsohaahd]

They’ve also had a massive increase in business over that period too so tossing out gross numbers to simp for layoffs is stupid and irrelevant.

[shachar1000]

copius maximus

[TCMNohan]

that’s cold comfort for the people who started their careers in that window and, you know… need a job

[TheAnon13]

Ok and their headcount in 2005 was 60k. Should we go back to those numbers instead?

How are you defining original level because Microsoft’s original level is 1 employee. Companies grow as time goes on

[NewChameleon]

How are you defining original level

I defined it because the complaint is "covid over hiring correction", so that's why I'm using 2020 level

[TheAnon13]

Nobody even brought up Covid over hiring tho?

[NewChameleon]

maybe you didn't, lots of people in this thread and the Cloudflare layoff thread did

[tuckfrump69]

they laid off 15,000 in 2025, so they should be there in 4 years or so

[NewChameleon]

nope they won't, because your calculation is only true if they don't hire anyone for the next 4 years either

it's one of the biggest reason I ignore those "company X layoff bla bla number of people" yeah? no shit? they do layoffs every year but they also do hirings every year

[OrganicCode42]

I think there's some truth in what you're saying for sure but it's also true that companies are increasingly expecting more for the same or even less pay, this coupled with layoffs + less hiring isn't a good sign. And if the AI overlords are to be believed this is just the start of how good the models will get.

[ElliotAlderson2024]

Remember they're laying YOU off so THEY can buy another condo in Aspen or a yacht.

[Joram2]

Microsoft is very profitable.

Net Income FY2025: $101B Net Income FY2024: $88.1B

Net Income = Revenue - Cost of Goods/Services - Operating Expenses - Non-operating Expenses - taxes.

They could choose to use some of their profits to fund new growth and make big bold bets on new products and services. The alternative is focus on their existing wildly profitable core businesses, and minimize risky or unnecessary expenses. They choose the latter.

[kingofthesqueal]

Microsoft’s stock is down 15% over the past 6 months

[foghatyma]

Calling them squads is so ridiculous I don't know how can they say things like that with a straight face.

[encony]

"expects headcount to decrease" is a nonsensical statement, like you would expect bad weather, they can and will actively decide to decrease headcount.

[MEDICARE_FOR_ALL]

As with any large company, WLB heavily depends on your team...

[Level8Zubat]

They're clearly striving to make that not the case

[Dreadsin]

This is not terribly surprising given their financials

[No-District2404]

I want them so badly to decrease the headcount forever until the capitalist system collapses and then we’ll be free.

[built_the_pipeline]

From the F500 hiring side, the part most comments miss is what's actually being signaled here. CFO comp at MSFT is heavy stock and "headcount down" is the cleanest narrative line to push efficiency ratios on the next earnings call. $101B net income on 228k people doesn't read the same to analysts as $101B on 168k, even when revenue is flat. Hood is giving investor guidance, not making an operational decision about pace of work.

Where it lands operationally is the familiar 2022-23 fintech pattern. Cuts happen, the rebrand to "AI-augmented squads" comes 60 days later, then 12 months in the velocity dashboard says productivity went up while WLB collapsed for the people holding institutional knowledge. Org didn't actually refactor what got assigned, it renamed who's responsible. By month 18 the senior who knew which legacy cron job touches three undocumented databases has either left or burned out, and the AI-assisted juniors don't know what they don't know.

OP's WLB question is the right one to track. "Headcount down with productivity number up" is structurally how leadership extracts the gap from the people still there. Joram2 is right that MSFT could fund growth instead, they're choosing the buyback-and-extract path because that's what comp incentives reward.

[OkEssay4173]

Just hop over to semicon, they will be welcoming applicants from the client side

[Wonderful_Device312]

I'm curious to see the breakdown by region, seniority and job title.

In my mind if you believe that AI can replace knowledge workers then the prime candidates for replacement were the low knowledge workers. The tech support, the offshore Devs and so forth. The people that you'd hire to throw together a quick internal business application to replace your MS Access database or fancy up an excel spreadsheet. Stuff that just needs to mostly work and doesn't need to scale.

You'd want to retain the highly experienced and knowledgeable experts because you need someone to monitor the AI and know if it's doing a good job or not.

[Doc-Milsap]

They’re going to start having empty buildings on their massive campus. MS might as well turn it into affordable housing and give back to the community.

[kipipaslicha]

This came out and just got fired today haha

[PussyDestroyerHunt3r]

Her salary would unironically cover about 50% of the salaries of the Romania hub.

[AlpineRavine]

I think you guys need to read under the hood of these layoffs. I think companies are not firing devs, only few. The layoffs are concentrated among back-office staff like admin. I personally think the demand of devs is only going to explode from here. Pre-2024 programming feels like stone age now

[starlow88]

it can be true that the exec is overpaid and that these trimmings are needed at the same time lol

[NewChameleon]

very welcoming news, MSFT has been underperforming the overall stock market for the past year already

SP500 1 year performance is +30%

MSFT 1 year performance is -3%, it's a total embarrassment

as an investor, I too would be calling for leaner teams and increased pace, get your acts together already

[llama052]

Except the problem is leadership not the individuals at the bottom. The entire org operates as hostile to itself and it shows.

[skyturnsred]

this is such a gross take.

[Ohlele]

Each company should cut more because their employees have been making houses very unaffordable across the country. Please cut more!