Microsoft's global workforce has fallen by 5,000 employees since last summer, as the company looks to streamline its corporate structure amid the artificial intelligence boom.

As of June 30, the end of Microsoft's 2026 fiscal year, the company had 223,000 full-time workers, according to a Wednesday regulatory filing. It's a 2% drop year-over-year and the first in the company's head count since 2016.

Microsoft laid off roughly 15,000 employees last summer, many of whom were affected during the 2026 fiscal year.

In addition to last summer's layoffs, the Redmond-based tech giant has been reducing its corporate workforce. It offered its U.S. workers an unprecedented voluntary retirement program in June, and it cut Xbox roles this month. Because the Xbox layoffs and the buyouts were enacted in July, it's unlikely those contributed to the drop in total employees.

Microsoft Chief Financial Officer Amy Hood said in April during an earnings call with analysts that Microsoft's head count will continue to shrink in the 2027 fiscal year.

During the company's most recent earnings call on Wednesday, Hood mentioned the 2% drop in head count from the 2025 fiscal year, but she did not expand on it.

Microsoft has had sweeping layoffs before, most notably in 2023 when the company let go of 10,000 employees. Microsoft didn't see a drop in head count that year, signaling it was hiring at a faster pace than now.

Unlike 2023, Microsoft has been trying more aggressively to keep a ceiling on its head count, as it pours billions of dollars into costly AI development and infrastructure. The company has also implied that because AI is such a radical shift in technology, the types of jobs needed at Microsoft are changing. Microsoft hasn't gone as far as to say AI is replacing workers.

Part of managing that workforce figure is looking for more creative ways to cut roles, including the retirement program. When Microsoft announced the buyouts, about 8,750 employees were eligible. The company said this month that roughly 30% of those employees took the retirement option.

Microsoft was expecting a $900 million charge from severance expenses due to the retirement program, but Hood said on Wednesday that fewer employees took the buyout than expected, slightly boosting the company's $35.8 billion reported profit for the fourth fiscal quarter. Microsoft did not break out the ultimate retirement program expenses.

©2026 The Seattle Times. Visit seattletimes.com. Distributed by Tribune Content Agency, LLC.