Microsoft May Slash 11,000–22,000 Jobs In January Amid Soaring AI Costs

Microsoft is reportedly preparing for another major round of layoffs this month, with the number of job cuts estimated to be between 11,000 and 22,000 across multiple divisions in the third week of January, according to TipRanks.

If confirmed, this would mark the company’s largest layoff exercise so far and the fourth straight January in which Microsoft has reduced headcount. The cuts are said to be linked to rising AI-related costs, particularly spending on data centers, chips and AI tools. Microsoft spent over $80 billion on AI last year, and that pace of investment is expected to continue.

Analysts had earlier projected that Microsoft may need to eliminate at least 10,000 roles annually to offset higher depreciation expenses stemming from data center expansion. In 2023, Microsoft cut 10,000 jobs, or around 5% of its workforce. In January 2024, the company laid off around 1,900 employees in its gaming division, roughly 1% of staff.

In 2025, job reductions continued: slightly less than 1% of employees were let go in January in what were termed performance-related cuts, followed by a 3% reduction in May and another 4% in July. Overall, more than 15,000 jobs were eliminated across several rounds in 2025, making it the biggest layoff year since 2023.

Reports suggest that roles in Azure cloud, the Xbox gaming unit and global sales are among those most at risk. Analysts believe Microsoft is reallocating spending from payroll to long-term technology assets, which could put middle management and legacy product teams under greater pressure. By contrast, positions tied to AI research and core cloud operations are viewed as more secure, in line with the company’s focus on staying competitive in AI.

The report also notes that Microsoft plans to tighten its return-to-office policy from February 23, 2026. Employees living within 50 miles of a Microsoft office will be required to work on-site at least three days a week.