In what's expected to be its biggest layoff in half a decade, insiders have stated that Microsoft is bracing to layoff thousands of its employees as it prepares to release its earnings report for the third quarter of the 2014 fiscal year.

Microsoft's workforce has reportedly swelled to an unhealthy size after the company acquired Nokia's devices and services divisions. And it's the personnel Microsoft inherited in the Nokia acquisition that's been expected to bear the brunt of the layoffs, along with those whose jobs have been made redundant as a result of the buyout and personnel migration.

Approximately 30,000 employees reportedly came over to the hardware and software giant during the Nokia acquisition. The migration brought Microsoft's ranks up to roughly 127,000 employees.

Microsoft CEO Satya Nadella said in a July 10 statement that his company needed to be more nimble in adapting to the market, before he vowed to streamline engineering and reduce both the time and effort it takes to deliver results.

"Finally, every team across Microsoft must find ways to simplify and move faster, more efficiently," Nadella said. "We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes."

Individuals familiar with the situation inside of Microsoft said the job cuts would likely extend beyond the company's handset division. Insiders indicated that the layoff could hit some of Microsoft's engineering, Xbox marketing and software testing teams.

Microsoft cut more than 5,0100 jobs in 2009, approximately 5.5 percent of its workforce at the time. The company projected that the move would save it roughly $1.5 billion in operating costs and $700 million in expenditures.

Microsoft will report its third quarter earning on July 22. The company has been expected to announce the layoffs at some point during the week of ending on July 19, in a move that has been projected to be heavier-handed than the 2009 layoffs.

In Nadella's July 10 memo, he also stated that he planned to strengthen Microsoft's workforce so that its employees could move between roles within the company with ease.

"Over the next six months you will see new investments in our workforce, such as enhanced training and development and more opportunities to test new ideas and incubate new projects," said Nadella. "I have also heard from many of you that changing jobs is challenging. We will change the process and mindset so you can more seamlessly move around the company to roles where you can have the most impact and personal growth."