Microsoft Shuts Down A Sales Unit, Cuts Over 1,000 Jobs In New Round Of Layoffs: Report

Tech giant Microsoft has reportedly laid off more than 1,000 employees over the past week, with the latest cuts going beyond the 10,000 layoffs the company announced earlier this year.

People familiar with the situation who asked not to be identified while discussing sensitive matters told Insider Wednesday that most of the recent cuts affected customer service and sales positions.

As part of the changes, Microsoft shut down its "Digital Sales and Success" group -- a sales and customer service unit that had thousands of staff at one point, the outlet reported.

"Organizational and workforce adjustments are a necessary and regular part of managing our business," a Microsoft spokesperson told International Business Times when asked about the reported layoffs. "We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners."

Microsoft did not provide any additional details on the layoffs.

While the cuts mostly affected customer service and sales roles, there were also several reductions among engineering project managers and marketing departments, Insider said. The customer solutions manager role was reportedly dissolved, and several affected employees were moved to customer success account management, but not many of them.

Two people told Insider that many managers were unaware of the plans, as Microsoft leadership was relatively silent about the changes this time.

"The focus is more to accelerate consumption than it is to help customers. What was promoted as one of the largest customer service groups in the industry is now struggling to keep up with demand," one person familiar with the matter told the outlet.

During this week's workforce reductions, some employees criticized Microsoft chief commercial officer Judson Althoff for not giving out more details about the layoffs and a sales kickoff event scheduled this year, as per internal messages shared with Insider.

In particular, one internal post related to the event included a query about whether the axed sales team would be replaced by AI tools.

Last week, Microsoft revealed in a Worker Adjustment and Retraining Notification (WARN) filing that it laid off a total of 276 employees in its Redmond and Bellevue offices, both in Washington state. Geekwire reported that 210 employees were let go at the Redmond office, while 66 employees working remotely were laid off at the Bellevue office.

"Organizational and workforce adjustments are a necessary and regular part of managing our business. We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners," Microsoft said in a statement at the time.

In January, the OpenAI backer announced plans to cut 10,000 jobs, citing the economic downturn that has been beating up the tech sector since last year. The company laid off nearly 1,000 workers in October 2022 following an earnings dip.

News about the latest cuts at Microsoft came after Morgan Stanley released bullish statements about the tech giant's investments in artificial intelligence.

Earlier this month, Keith Weiss, a Morgan Stanley analyst, said generative AI "looks to significantly expand the scope of business processes able to be automated by software, and Microsoft stands best positioned in software to monetize that expansion."

The investment banking giant said Microsoft had a "pole position" in the generative AI race, giving it a 22% upside potential that could allow the company to join Apple in the $3 trillion valuation club.

Just last week, Microsoft announced the expansion of its partnership with accounting giant KPMG, which will include AI solutions for clients. "The Microsoft cloud and Azure OpenAI Service capabilities will empower the KPMG global workforce of 265,000 to unleash their creativity, provide faster analysis and spend more time on strategic advice," the tech giant said in a press release.

(This article has been updated to include comments from Microsoft.)