Microsoft’s latest decision to shed roughly 6,000 roles – nearly 3% of its global workforce – raises fundamental questions about how Big Tech companies define progress in the age of artificial intelligence. Despite impressive financials and soaring ambitions in AI, the tech giant is opting to trim human capital in pursuit of operational efficiency. A strategic contradiction wrapped in short-term logic.

Indeed, the company is under pressure; its AI investments are hefty; and profit margins are being squeezed. But does that warrant thinning the workforce – especially when the very employees being laid off helped build the platforms, products, and revenues that fuel Microsoft’s expansion in the first place?

These cuts may be dressed up as a “recalibration,” but they’re still job losses. And they come at a time when Microsoft can afford to think more expansively about its obligations – not just to shareholders, but to its people.

The paradox of plenty

At first glance, the rationale seems convincing. Microsoft has committed a staggering US$80 billion in capital expenditures for this fiscal year, most of it to expand data centres to support AI infrastructure. With margins under pressure – Microsoft Cloud’s profit margins fell from 72% to 69% year over year – some belt-tightening might seem prudent.

But here’s the paradox: these cuts are happening in the midst of record performance. The company has exceeded Wall Street expectations for four consecutive quarters, clocked in $25.8 billion in earnings last quarter, and posted year-on-year growth on several platforms, including LinkedIn, which grew 7%. This isn’t the picture of a business in crisis. It’s a business choosing to sacrifice its people in the name of AI.

Analyst Gil Luria’s remarks sum up the prevailing mindset: “We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 to make up for the higher depreciation levels.” This equation might satisfy the spreadsheet, but it overlooks the more important variable: people. The very foundation of a company’s culture, creativity, and continuity.

Efficiency, but at what cost?

Microsoft is cutting roles and flattening its hierarchy. According to Chief Financial Officer Amy Hood, the move is about “building high-performing teams and increasing our agility by reducing layers with fewer managers”. This signals a cultural shift towards a leaner, arguably more ruthless, model.

But there’s a danger in assuming that fewer layers equals more efficiency. Management exists not merely to supervise but to mentor, translate strategy into action, and ensure institutional knowledge isn’t lost.  By pruning middle management too aggressively, Microsoft risks hollowing out the connective tissue of its organisation – just when it needs alignment and cohesion the most.

What’s more, this round of layoffs isn’t performance-related, as was the case in January. It’s strategic. That means even high-performing employees may be shown the door not because they’ve failed the company, but because the company has changed its priorities. That’s a brutal message to send in an already volatile job market.

AI should augment, not replace

AI adoption is now being used as a justification for redundancy. This dangerous narrative frames AI as a zero-sum game, where gains in automation must be offset by losses in human employment.

This view is both narrow and defeatist. AI can elevate productivity, enhance decision-making, and reduce drudgery. But it shouldn’t become a pretext to slash jobs indiscriminately, especially when the financials don’t demand it.

LinkedIn: a telling contradiction

The decision to cut roles at LinkedIn is particularly telling. Here’s a platform that grew its revenue by 7% in the past year. A platform that continues to post robust numbers. Yet, it hasn’t been spared from the axe.

Microsoft claims the decision is structural rather than performance-related, aimed at simplifying management and increasing profitability. But if even successful, growing segments are vulnerable to layoffs, what does that say about the broader corporate philosophy? That no role is safe – not even in a thriving division.

LinkedIn’s previous cuts, particularly in China, might partly explain the decision. But they don’t justify it. If anything, they highlight a troubling pattern: even in zones of growth, contraction is the default response to structural change.

An avoidable trade-off

The refrain, “Rob Peter to pay Paul,” aptly captures Microsoft’s current approach: cutting jobs today to fund AI capabilities for tomorrow. But this binary thinking is outdated. It assumes a fixed pie when innovation should be expanding the possibilities.

Instead of cutting roles, Microsoft could have explored job redesigns, redeployment, or re-skilling initiatives to align talent with its evolving priorities. With the company’s vast resources, surely there’s scope to retain talent and still invest heavily in AI.

Moreover, in an age when companies are scrutinised for their social impact, brand trust, and employee wellbeing, these layoffs send the wrong signal. They suggest that even profitable enterprises will choose short-term cost savings over long-term people investment.

The human cost of progress

To be clear, this isn’t an attack on ambition. AI is a transformative force, and Microsoft has every right to lead in that arena.

But ambition devoid of empathy is a recipe for alienation.

The true test of leadership lies not in how much you invest in technology, but in how you treat your people along the way.

These layoffs, however rationalised, carry a human cost. Careers disrupted. Livelihoods affected. Teams dismantled. At a time when the world is grappling with economic uncertainty and technological upheaval, stability from institutions like Microsoft matters more than ever.

The irony is that the very AI capabilities Microsoft is building rely on the talents of engineers, designers, researchers, and managers – many of whom may now find themselves surplus to requirements.

Layoffs aren’t destiny

Microsoft’s actions may be framed as inevitable. But they aren’t. They’re choices – and not necessarily the right ones. In choosing to prioritise capital expenditures over people, the company risks undermining the very culture and cohesion it will need to navigate the AI age.

HR and business leaders everywhere should take heed: the future is not only about machines. It’s about how we integrate machines into a human-centred vision of work. Progress doesn’t have to come at the expense of people. But it will – if we let it.

Layoffs may balance the books, but they imbalance lives. And in the long run, that’s a price no company – no matter how big – can afford to ignore.