The move represents the second major round of layoffs in a year for Microsoft, which cut some 18,000 jobs a year ago as part of its effort to integrate the Nokia handset division.
Most of the cuts at the US tech giant will be in the phone division, and the company will write down the value of its phone business acquired from Nokia by some $7.6 billion (roughly Rs.48,317 crores).
A Microsoft statement said it would "restructure the company's phone hardware business to better focus and align resources."
Microsoft has failed to get much traction for its Windows Phone platform even with the acquisition of Nokia. A survey by IDC said Windows was expected to capture just 3.2 percent of the global smartphone market this year.
"I am committed to our first-party devices including phones. However, we need to focus our phone efforts in the near term while driving reinvention," Chief Executive Satya Nadella said in a memo to staff.
"We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family."
Microsoft had about 118,000 employees worldwide at the end of March, according to its website, with about half in the United States.
Microsoft plans to start rolling out Windows 10 in late July, introducing a new operating system which can be used to power not only personal computers but a range of mobile devices.
Last month, Microsoft announced a shakeup of top management including the departure of Stephen Elop, the former Nokia chief who came on board with the US giant's acquisition of the Finnish firm's handset unit.