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Microsoft has announced the layoff of around 4,800 employees, representing about 2.1% of its global workforce, as the company starts its new fiscal year. The latest round of job cuts mainly affects its commercial sales teams and Xbox gaming division.
In the latest restructuring process, Microsoft has laid off around 4,800 employees, which is around 2.1 per cent of its global workforce. This latest layoff majorly impacts its commercial sales team and Xbox gaming division. According to the company, this latest job cut is a part of its broader business transformation, which is designed to develop a long-term position in a fast-changing tech industry. Before these layoffs, the company employed over 2,20,000 people across the world.
Microsoft’s Chief People Officer Amy Coleman shared the news through an internal memo, which explained that the company is focusing its people, investments, and resources on areas which will better serve customers in the future.
Microsoft Layoff: Annual Restructuring?
The timing of the layoff is not unusual for Microsoft. The company has made workforce adjustments at the beginning of its fiscal year. Last year as well, the company reduced its workforce by around 15,000 employees through two separate rounds of layoffs, which represents 4 per cent of its staff. This year’s cuts are small, partly because the company previously introduced a voluntary retirement programme for eligible US employees.
Around one-third of nearly 9,000 eligible employees accepted the retirement package, which helps the tech giant to reduce the scale of compulsory job losses during this latest restructuring.
Why Is Microsoft Laying Off Employees?
The layoffs come at a time of growing investor concern over the company’s heavy investment in artificial intelligence. The company’s stock experienced its sharpest monthly decline since the dot-com era, especially after falling around 19 per cent in June. Investors questioned whether Microsoft’s substantial AI spending will deliver the expected financial returns in the coming years.
According to Coleman, AI is not the direct cause of employees’ layoffs. She acknowledged that AI is changing the way work is carried out across Microsoft but made it clear that the company is not eliminating positions simply because they are being replaced by AI systems.
Microsoft Layoffs 2026: Xbox Division Faces the Largest Impact
Out of all the layoffs, around 1,600 come from Xbox, and the division is expected to lose around 3,200 employees during the current fiscal year. These reductions in jobs amount to around a 20 per cent decline in the Xbox workforce.
Xbox CEO Asha Sharma stated that “Our business today is not healthy,”. According to Sharma, Xbox currently operates with profit margins 3 to 10 times lower than those of comparable platform and publishing businesses.
Microsoft plans to move four well-known game development studios, Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs, into independent ownership under new management. The company says this approach is intended to protect both ongoing game projects and valuable intellectual property.
Xbox’s leadership structure is also being simplified. Management layers will be reduced to create a faster and more efficient decision-making process. In addition, Helen Chiang will take on a newly created Chief Operating Officer role, overseeing content, hardware, platform, and services across the Xbox business.
More Organisational Changes Expected
As per Coleman, the company is in the early stages of its transformation and other business units may also undergo restructuring in the future. She encouraged employees to hold leadership accountable as additional organisational changes are introduced.
As Microsoft continues investing heavily in artificial intelligence while reshaping its core businesses, the latest layoffs highlight the company’s effort to balance innovation with long-term financial performance. For employees, investors, and customers alike, the restructuring marks another important chapter in Microsoft’s ongoing evolution.
Sudeep Singh Rawat is a Copy Editor at NewsX Digital with over five years of experience in digital journalism. He covers national and international news, with a focus on politics, crime, technology, public affairs, and trending topics. Before joining NewsX Digital, he worked with Business Standard, The Sunday Guardian, and other digital media organisations. His reporting focuses on breaking news, enterprise stories, and explainers that inform readers through accurate, balanced, and context-driven journalism.
