Amid strong financial performance, Microsoft is preparing for possible workforce changes as it shifts focus toward AI investments, restructuring, and cost efficiency. The update came alongside its FY26 quarterly earnings report.
Chief Financial Officer Amy Hood indicated that hiring may slow, teams could be reduced, and layoffs may continue in the coming months. Speaking about the company’s outlook for the next financial year from July 2026 to June 2027, she said, “We continue to evolve how we operate to increase our pace and agility, and therefore, we expect headcount to decrease year over year.”
Ahead of the earnings call, Hood also shared an internal memo outlining plans to build smaller and more focused teams. The approach aims to create clearer responsibilities and increase accountability among employees. The memo added that restructuring efforts will continue as the company works to improve efficiency.
Recently, Microsoft offered voluntary retirement to 7% of its US workforce, impacting nearly 8750 employees.
Despite these changes, the company reported strong growth. Revenue increased by 18% to $82.9 billion. CEO Satya Nadella said, “We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era.” He added, “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.”
Microsoft’s Intelligent Cloud segment also performed strongly, with revenue rising 30% to $34.7 billion. The company plans to continue investing heavily in AI infrastructure.
Earlier, Microsoft revised its deal with OpenAI, securing a 20% share of the startup’s revenue through 2030, regardless of technological developments. However, it will no longer hold exclusive rights to OpenAI’s products and AI models. Meanwhile, OpenAI is expanding its partnership with Amazon, bringing its models and coding tools to AWS.
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