The majority of these losses occurred within product research and development roles, which decreased for the second consecutive year to a total of 77,000 employees.
This contraction occurred despite Microsoft achieving its largest one-year revenue increase in history, with earnings rising 18% to $331.8 billion.
The company is currently balancing its personnel costs against soaring capital expenditure—the money spent on physical assets like data centers—which reached $41 billion in the most recent quarter.
According to the source, many technology leaders are tightening operating expenses through job cuts to offset the massive costs of building out AI infrastructure.
The company is also changing how it utilizes its remaining staff by shifting engineers out of internal product development and into customer-facing roles through a new $2.5 billion initiative.
Microsoft is further streamlining work through AI coding tools like GitHub Copilot, which the source indicates can reduce the time and personnel needed to ship software.
While the year-end filing shows a 2% overall decline in staff, these figures do not yet include thousands of additional cuts and voluntary retirements that took place in early July.