Microsoft cuts 4,800 jobs as AI reshapes the business
Microsoft has begun its new financial year with another major restructuring, confirming that approximately 4,800 employees, around 2.1% of its global workforce, are going to lose their jobs. The cuts primarily affect Microsoft’s commercial sales teams and the Xbox division, where the company is continuing a broader overhaul aimed at simplifying operations and refocusing its long-term strategy.
In a message to employees, Microsoft’s Chief People Officer, Amy Coleman, said the layoffs are part of a wider transformation driven by changing business priorities and the growing role of artificial intelligence. She stressed that the eliminated positions are not being directly replaced by AI, but acknowledged that AI is fundamentally changing how work is performed across the company.
The gaming business faces some of the biggest changes. Around 1,600 Xbox employees are reportedly affected in this round, with Microsoft planning to reduce the division’s workforce by roughly 20% over the current financial year. The company is also restructuring its gaming portfolio, including the sale of several Xbox studios, as it looks to streamline the business.
Microsoft says it tried to limit compulsory layoffs where possible. Over the past year, more than 4,000 employees were moved into new internal roles, while a voluntary retirement program encouraged eligible long-serving staff to leave with enhanced severance packages and extended healthcare benefits. According to the company, more than 30% of eligible employees accepted the offer.
Despite those efforts, thousands of employees are still leaving the company. The announcement reflects a broader trend across the technology sector, where companies are reorganizing around AI while reassessing spending in more traditional business areas.
