Microsoft is laying off around 6,000 workers, less than 3% of its total staff, in order to reduce expenses while spending big on artificial intelligence (AI).

This is Microsoft’s biggest job cuts since last year, when it laid off 10,000 workers. Earlier in January, some staff were let go due to performance issues, but the current layoffs are not related to that, according to a report by CNBC.

In recent years, big tech companies like Microsoft and Google have been investing more money into AI, which they believe is the future of the business. At the same time, they’re cutting jobs.

“We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace,” a Microsoft spokesperson said.

Microsoft had about 228,000 employees as of June last year. The company reshuffles its staff to focus on new or more important areas of work.

Google has also laid off hundreds of employees in the past, aiming to cut costs and focus more on AI development.

AI SPENDING IS HIGH, BUT SO ARE THE RISKS

Although Microsoft’s cloud platform Azure did better than anticipated. The expense of developing its AI systems is eating into profits. In the fourth quarter, Microsoft Cloud profit margins fell to 69%, down from 72% in the previous year.

The firm is investing a staggering $80 billion this year, largely to construct additional data centres necessary to house AI tools and services.

Technology analyst Gil Luria at D.A. Davidson commented that the layoffs demonstrate Microsoft is working hard to manage the pressure on earnings driven by their massive AI investments.

“We believe that every year Microsoft invests at the current levels, it would need to reduce headcount by at least 10,000 in order to make up for the higher depreciation levels due to their capital expenditures,” Luria explained to Reuters.

With inputs from Reuters