Microsoft is weighing a fresh round of job cuts that could begin as early as next month, with the potential restructuring poised to significantly alter the company’s management and engineering teams, according to individuals familiar with internal discussions.
According to sources with direct knowledge of the matter, Microsoft’s leadership is holding active discussions about targeting middle management roles and various non-coding positions for possible layoffs. The central aim, the sources explained, is to improve the company’s organizational efficiency by increasing the proportion of software engineers relative to non-coders, such as product and program managers, on project teams.
Within certain Microsoft divisions, managers are evaluating ways to broaden their “span of control”—a metric referring to the number of direct reports assigned to each manager. By increasing this span, the company would have fewer managers overseeing larger teams, thereby streamlining the organizational structure. These considerations are part of ongoing planning efforts, and while the exact number of jobs that could be affected remains undetermined, one source suggested that the cuts could impact a significant portion of some teams. A Microsoft spokesperson declined to comment on the matter.
The move mirrors a broader trend within the technology sector, where companies are increasingly reducing layers of middle management to enhance operational efficiency. Amazon, for instance, has been striving to raise the ratio of individual technical contributors to managers across its teams. Similarly, Google CEO Sundar Pichai informed employees in December that the company had reduced its vice president and manager roles by 10% as part of its own push for greater efficiency.
Inside Microsoft, a key focus is on lowering the “PM ratio”—the number of product or program managers per engineer—on various teams. This approach has been championed by Charlie Bell, Microsoft’s head of security, who previously helped pioneer Amazon’s cloud division. At Amazon, a similar metric is known as the “builder ratio,” which tracks the proportion of software engineers to so-called “non-builders,” including program managers and project managers. Bell has introduced this philosophy at Microsoft, where, according to a person familiar with his plans, his security organization currently maintains a ratio of roughly 5.5 engineers per manager. Bell aims to increase this figure to 10 engineers for every manager, thereby maximizing the number of technical contributors on his teams.
One individual familiar with these deliberations described the engineer-to-manager ratio as a proxy for measuring the number of employees engaged in coding work. The proposed cuts would require managers to align with specific budget constraints and team composition targets designed to boost these ratios.
The potential changes would come on the heels of an earlier workforce reduction this year, in which Microsoft dismissed approximately 2,000 employees it categorized as “low performers.” The upcoming round of job cuts is also expected to target employees identified as lower performers, particularly those who have received an “Impact 80” or lower score in Microsoft’s performance reviews for two consecutive years.
Microsoft’s performance evaluation system, known as the “ManageRewards slider,” operates on a 0 to 200 scale and directly influences employee bonuses and stock awards. The midpoint is 100, with lower performance ratings set at 0, 60, or 80, and higher performance ratings at 120, 140, and 200. An “Impact 80” rating, for example, results in the employee receiving only 60% of their standard stock award and 80% of their maximum possible bonus.
As Microsoft weighs these changes, it joins other major tech firms in reevaluating organizational structures to prioritize technical contributors and reduce management overhead. However, final decisions regarding the scope and timing of the layoffs have not yet been made, and discussions continue within the company.
