Microsoft is preparing for another round of layoffs, with thousands of employees reportedly expected to be affected across multiple business divisions. According to a Business Insider report, the upcoming job cuts are likely to impact teams in sales, consulting and the Xbox gaming business as the company continues efforts to manage costs while increasing investments in artificial intelligence.
The layoffs are expected to be announced next week, although the final timeline could still change.
Microsoft layoffs expected after new fiscal year begins
The reported workforce reduction is expected to affect fewer than 2.5 percent of Microsoft’s global workforce of around 220,000 employees. That would make it smaller than the company’s layoffs in 2025, when about 6,000 jobs were cut in May, followed by another 9,000 positions in July, together accounting for roughly 4 percent of employees.
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As per the Business Insider report, some employees whose roles are being eliminated are being offered opportunities to move into other positions within the company.
Microsoft has often announced organisational changes around the beginning of its fiscal year on July 1. The latest move comes as the company continues to balance spending while expanding its AI strategy. The report also noted that Microsoft’s stock has declined by around 17 percent over the past month.
Voluntary retirement programme reduced workforce earlier this year
Before considering another round of layoffs, Microsoft introduced a voluntary retirement programme for eligible US employees earlier this year. The offer applied to employees at level 67 and below whose combined age and years of service totalled 70 or more.
Nearly one-third of the approximately 9,000 eligible employees accepted the buyout. Sales staff working under commission-based compensation plans were not included in the programme.
The initiative marked the first voluntary retirement programme in Microsoft’s 51-year history. Last month, the company said it would record a $900 million charge during the current quarter to cover the cost of the buyouts.
Xbox division likely to face restructuring
The Xbox gaming division is also expected to be affected. The anticipated changes follow a memo from new gaming CEO Asha Sharma, who told employees the business needed a “reset”. The layoffs would be the first major restructuring under Sharma, who succeeded longtime Xbox chief Phil Spencer in February.
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According to The Verge, citing people familiar with the plans, Microsoft could also close or reorganise one of its Xbox-owned studios.
The total number of jobs that may be cut has not been officially confirmed. Giant Bomb suggested the figure could be around 1,000, although neither Bloomberg nor Microsoft has verified that estimate. Microsoft declined to comment.
Shortly before Bloomberg’s report was published, Sharma and Xbox chief content officer Matt Booty shared a memo with employees outlining what they described as five “realities” the gaming business must address. The memo was later published on Xbox Wire.
FAQs:
Why is Microsoft laying off employees again?
Microsoft is reportedly cutting jobs to control costs while continuing to invest heavily in artificial intelligence.
Which Microsoft teams could be affected by the latest layoffs?
Reports suggest the layoffs may impact sales, consulting and Xbox gaming teams, though Microsoft has not officially confirmed the details.
