Oracle has cut about 21,000 jobs as the tech giant undergoes a major restructuring and is investing billions in AI and data-centre infrastructure. The reductions represented about 13% of the company’s workforce during the fiscal year that ended on May 31.
The scale of the workforce cuts has attracted considerable attention as Oracle is rapidly investing in cloud infrastructure and AI capabilities. Oracle reported restructuring costs of around $1.8 billion, and it cited the adoption and deployment of AI as a major factor behind the workforce reduction.
The layoffs have also prompted comments by Oracle Chief Financial Officer Hilary Maxson. In all-hands meetings shortly after the job cuts, Maxson said that the ultimate objective should not be to “do more with less.” Instead, she said there should be a clear focus on removing work that does not contribute to customer outcomes and putting resources into more impactful work. Oracle employees are undergoing a lot of organisational changes and are looking to grow their business in cloud computing and artificial intelligence.
Oracle’s AI ambitions will require massive infrastructure investments. The company’s capital expenditure rose to $28.5 billion in the third quarter, from $8.5 billion in the second quarter of last year. This is in line with Oracle’s investment target of between $90 billion and $95 billion in capital expenditure for fiscal 2027.
Part of that money will go into data-centre capacity and infrastructure for AI computing to accommodate a huge increase in demand. The rapid growth in capital expenditure underlines the scale of the commitment Oracle is making in the rapidly growing AI and cloud industry.
The workforce reduction is, therefore, part of a complicated new direction in Oracle’s business strategy. It is now in the process of trying to control costs by focusing on operations and investing heavily in infrastructure (and growth) to support future growth. Oracle's cloud infrastructure business has been growing rapidly, and recent reports stated that Oracle Cloud Infrastructure revenue in the past 12 months grew 121% year-over-year.
The company also said in the same quarter that it delivered 850 megawatts of AI computing power and won more than $30 billion in new AI-related contracts, highlighting the commercial demand for its infrastructure expansion.
Oracle’s layoffs have also raised questions about how they will affect its employees in India, one of the company’s major global technology centres. There have been reports of another round of job cuts in India, where the Times of India said between 1,000 and 1,500 employees could be affected, but said the number was not verified.
As reported in previous reports, web development and maintenance staff have been affected. Oracle has not publicly confirmed the number of employees affected in this latest India round, and it is difficult to know at this stage how many people have been affected.
The shifts in Oracle are indicative of the overall tech industry transformation as companies are looking at workforce requirements as they are investing heavily in AI. But AI investment and layoffs are not always easy to link. A recent review of the industry has observed that companies tend to combine AI-related restructuring with cost reduction, organisational reorganisation, and other projects to improve efficiency, so not all job cuts are directly related to automation.
For Oracle, the immediate concern is how its workforce and expenses can be put to the best use, as well as its AI and cloud strategy. CFO Hilary Maxson’s message tells us to focus on high-impact work instead of just increasing workloads, and Oracle is looking to grow in a space of technology that is the most capital-intensive.
