On April 9th, news broke that Microsoft's joint venture in China, Wicresoft, had laid off 2,000 employees in a sudden move. An internal email sent by the HR team informed staff that "due to geopolitical changes and shifts in the international business environment, Microsoft will adjust its global strategic layout and officially cease operations in China from April 8, 2025." The layoffs are tied to the closure of the Microsoft project team at Wicresoft, a long-term outsourcing partner for the tech giant in China.

Founded in 2002, Wicresoft has been Microsoft's largest outsourcing provider in China, handling critical services like Office software after-sales support and Windows system tech support. Despite the cutbacks, other Wicresoft projects unrelated to Microsoft, such as those in the automotive and financial sectors, remain unaffected. Core Microsoft operations in China, including Azure cloud services and Office sales, are still running smoothly. Employees who were let go will receive N+1 compensation, with opportunities to transfer to overseas positions in places like Vietnam, Japan, and Hungary.

Sources from Wicresoft's Wuxi office revealed that around 400-500 employees were affected at that location alone. One employee described how, after receiving the layoff notice, workers spent the day packing up their belongings, signing severance agreements, and saying their goodbyes. Despite the standard N+1 severance, some employees are negotiating for better compensation, including higher payouts for unused vacation days.

While the move has shocked many, there were signs of an impending shift. A Wicresoft employee mentioned that, about two weeks ago, some of their responsibilities were transferred to colleagues at the company's India office. Moreover, since 2023, Microsoft has been gradually moving its AI research teams to the U.S. and New Zealand, and in 2024, it will relocate its core AI teams from China. This latest outsourcing change aligns with Microsoft's global strategy of reducing its dependency on a single market. Additionally, low-value services like tech support are increasingly being automated by AI. Microsoft's internal data shows that its AI-driven customer service now handles 85% of Windows after-sales issues, leading to a 70% reduction in human labor demand.

Although the layoffs have raised questions about Microsoft's future in China, the company has denied reports claiming that it will cease operations entirely in the region. It clarified that Wicresoft's outsourcing services—especially those related to user data—are being moved to other regions due to new data security regulations. This follows an executive order by the Biden administration that will come into effect in 2025, limiting access to sensitive U.S. data by certain countries, including China.

Industry insiders note that the layoffs are not only the result of business adjustments but also reflect broader geopolitical trends. As data security concerns escalate, foreign tech companies are increasingly re-evaluating their operations and workforce strategies in China. For employees like Wicresoft's Zhao Hu, the experience has been jarring. He shared that, while the compensation package is acceptable, the abruptness of the layoffs left many employees in a state of shock, particularly given the lack of prior notice.

The ongoing trend of tightening data security regulations, coupled with growing tensions between China and the U.S., is forcing companies to adapt quickly. Zhao Hu, like many of his colleagues, sees this as an opportunity to rethink career paths and deepen skills to stay competitive in a rapidly changing global tech landscape.