Technology
Microsoft cuts 4,800 jobs as Xbox division faces sweeping restructuring
The software giant is laying off roughly 2.1 percent of its workforce, with the gaming and commercial sales units taking the biggest hit.
The Verge
Microsoft announced the elimination of approximately 4,800 jobs on the opening day of its new financial year, marking the company's second major workforce reduction in as many years. The cuts represent roughly 2.1 percent of the company's total headcount and follow a wave of 9,100 layoffs announced last year.
Where the cuts are deepest#
The job losses are concentrated in two key areas: the commercial sales organization and the Xbox gaming division. Within Xbox specifically, the immediate impact will affect around 8 percent of the division's employees, with plans to eliminate a total of 15 percent of Xbox positions by year's end. As part of a broader "reset" of its gaming business, Microsoft is also divesting four Xbox studios and considering the sale of another, signaling a fundamental rethinking of its gaming portfolio.
AI reshaping the workplace#
In an internal memo to staff, Amy Coleman, the company's chief people officer and executive vice president, attributed the restructuring to technological shifts driven by artificial intelligence. She emphasized that while AI is fundamentally changing how work is performed across the industry, the eliminated roles are not being replaced by automated systems. Instead, Microsoft views the layoffs as necessary to realign its operations and redirect resources toward areas where AI's impact on business is most acute.
Alternative paths taken first#
Before resorting to layoffs, Microsoft attempted to minimize workforce reductions through other means. The company recently offered an enhanced voluntary retirement package to eligible U.S. employees—those whose combined age and years of service equaled 70 or higher—which included five years of continued healthcare access, cash severance, and six months of accelerated stock vesting. Over 30 percent of those eligible opted into the program.
In addition, Coleman noted that Microsoft has successfully redeployed more than 4,000 workers into new roles over the past year, including an additional 500 in the current month. The company framed these efforts as evidence of its ongoing commitment to minimizing involuntary departures where feasible, though Coleman acknowledged that such reassignments cannot prevent all job losses.
