Microsoft is reportedly cutting up to 3,000 staff globally as it focuses on the competitive cloud computing sector.
The technology giant wants to build on revenue growth in its cloud computing division, but it faces intense competition from rivals such as Amazon and Google.
The reorganisation will hit the company’s sales unit, reports say.
Microsoft would only confirm that “thousands” would be affected by the cuts.
The firm employed about 121,000 people globally at the end of March.
In recent years, the firm has timed major reorganisations to coincide with the end of its financial year in June. Previous layoffs targeted the firm’s hardware unit.
This year’s cuts could affect as many as 3,000 people, according to CNBC. It said about three quarters of the layoffs will be outside the US.
Microsoft said it had notified some employees that their positions will be “eliminated”.
“Microsoft is implementing changes to better serve our customers and partners,” it said in a statement.
“Like all companies, we evaluate our business on a regular basis. This can result in increased investment in some places and, from time-to-time, re-deployment in others.”
Chief executive Satya Nadella has been focusing on the firm’s cloud unit, which has been a source of strength for the Microsoft.
The firm said its “intelligent cloud” products generated $1.7bn (£1.3bn) in revenue for the nine months to the end of March, driven by doubling revenue from its cloud computing platform Azure.
However, Microsoft is still lagging behind Amazon Web Services in the sector.