Microsoft workforce declines for first time in a decade

Microsoft's total headcount has decreased for the first time in ten years, according to its 2026 fiscal year annual report. As of June 30, 2026, the company employed approximately 223,000 full-time workers, down from 228,000 during the same period in 2025.

The reduction follows several years of steady growth and a period of organizational restructuring. While the company continues to hire for specific projects, layoffs have outpaced new recruitment. The product research and development division saw a notable decline, dropping from a peak of 81,000 employees in 2024 to 77,000. Sales, marketing, and administrative roles also experienced reductions.

Despite the decrease in staff, Microsoft reported an 18% increase in revenue for the 2026 fiscal year, reaching $331.8 billion. The company is significantly increasing capital expenditures, with $41 billion spent in the June quarter alone, as it shifts focus toward artificial intelligence and data center infrastructure. Microsoft leadership has stated that the workforce changes are intended to build high-performance teams and that the reductions are not a direct result of AI replacing human roles.