Hit hardest in Microsoft layoffs? Developers, product managers, morale

Microsoft’s push for efficiency placed a heavy emphasis on eliminating layers of management, but layoff data from this week showed managers didn’t bear the brunt of job cuts.

The Redmond-based software maker on Tuesday announced it was letting go of more than 6,000 employees companywide, representing about 3% of its workforce. In Washington state, Microsoft laid off 1,985 workers.

A Microsoft spokesperson said the layoffs weren’t performance-based but rather part of an overall strategy to streamline the corporate ranks and flatten management across the company.

Microsoft’s push for what it calls nimble teams is part of an industry trend, as tech companies increase spending on artificial intelligence and restructure entire divisions.

At Microsoft, employees describe an increased emphasis on AI in their daily work. Some said they’ve felt a shift over the past year, with more pressure to incorporate AI into their role rather than view it as a helpful tool.

In April, CEO Satya Nadella said in a fireside chat with Meta CEO Mark Zuckerberg that 20% to 30% of the company’s code was written by AI.

In internal memos from various divisions viewed by The Seattle Times, higher-ups said teams would be restructured so that managers had more direct reports under them than before.

In Microsoft’s filing to the state’s Employment Security Department, it disclosed the types of roles that had been eliminated and whether employees were coded as managers or individual contributors. Less than 17% of the layoffs affected employees listed as managers.

Software engineers were overwhelmingly affected the most, with 817 roles eliminated in Washington. The second-highest role represented was product managers, with 373 laid off.

Microsoft declined to comment.

For one software engineer who was laid off, the cut came as a shock.

News had leaked in April that layoffs were looming in May. But at Microsoft the feeling was that middle managers would be among the most affected, along with product managers, those who are involved with a product’s development and launch but aren’t building it. Software engineers, the ones building the products, were thought to be safe.

Microsoft Chief Financial Officer Amy Hood said in late April during the company’s most recent earnings call that Microsoft was focused on building agile teams with fewer managers.

“I really didn’t expect this at all and I didn’t ask leaders in my organization many questions leading up to it because I thought I wouldn’t be affected,” said the software engineer who was laid off Tuesday after a year and a half at the company. “The week prior one of the higher-ups had been asked and he said layoffs were coming and he was very upset about what the outcome would be.”

That engineer asked to remain anonymous to protect relationships in the industry.

She said she showed up to her office at 9 a.m., received a meeting invite for 11 a.m. and was laid off on a mass call with about 150 other people.

The call added to the random nature of the layoffs, she said. Nobody had their video on, names were anonymized and microphones were muted. Chat was also disabled.

“The (leader) of our organization cried when she was telling us what was happening,” the software engineer said. “It was hurtful to see, because Microsoft is this company that says it cares about its people and leaders didn’t even have a say in who was let go.”

Unlike in 2023, when Microsoft laid off about 10,000 people, employees didn’t receive a companywide announcement about the sweeping layoffs on Tuesday. Organization leaders stepped into channels on the messaging app Slack to try to answer questions and several held town halls later in the week to address any concerns about employees’ roles going forward.

During GitHub’s town hall session on Thursday, CEO Thomas Dohmke repeated Microsoft’s reasoning for the layoffs. Teams will become more agile and individual contributors will have more accountability and the opportunity to lead. The Microsoft subsidiary, a platform for developers to create and store code, will also not be hiring for the rest of the fiscal year, which ends June 30. Backfilling for attrition will begin in July.

Some organizations addressed the “evolving” role of product managers at Microsoft.

For one of the teams under the Windows banner, an executive said in an internal memo Wednesday that the developer-to-product manager ratio will get wider, copying the trend across the tech industry.

“In a leaner PM organization, each of you will have significantly larger scope,” he wrote.

With the product manager role undergoing changes, questions swirled for some developers about what that would mean for their own roles. Managers weren’t armed with many answers but speculated there could be reorganization on the developer side of divisions, with them taking on some of the work that product managers were doing.

Microsoft didn’t disclose which teams had been affected the most. But Scott Guthrie, the leader of Microsoft’s cloud computing and AI group, told his employees in an internal memo Thursday that he had worked over the last few months to minimize the impact for his division.

“We have proactively moved people across teams and functions to cover investment needs in critical priorities and avoid job eliminations,” he wrote. “While this reduced the number of job eliminations in C+AI, it did not prevent us from having to make some very difficult decisions.”

Aside from software engineers and product managers, the highest number of roles affected in Washington this week were program managers. Between individual contributors and managers, about 349 workers who were cut had program management in their title. Roughly 16% of them were classified as managers.

Microsoft Philanthropies underwrites some Seattle Times journalism projects.