Microsoft cuts 4,800 jobs, mostly in Xbox and sales divisions

Microsoft announced layoffs affecting 4,800 employees, approximately 2.1% of its global workforce, as the company enters its new fiscal year. The majority of the cuts target the commercial sales organization and the Xbox gaming division. This follows a reduction of roughly 9,100 roles a year ago. In an internal memo, Executive Vice President and Chief People Officer Amy Coleman explained that the moves are driven by a changing technology landscape and the need to realign resources amid the rise of AI. She directly stated that the eliminated roles are not being replaced by AI, but acknowledged that AI is transforming how work is done.

The Xbox division will see 1,600 job cuts today, with plans to reduce a total of 20% of its workforce by the end of the fiscal year. Additionally, Microsoft is selling off four Xbox studios and weighing the sale of another, aiming to 'reset' its gaming business after years of challenges. To mitigate layoffs, the company had previously offered a voluntary retirement program for U.S. employees aged 70 or older (combined age and years of service). Over 30% of eligible employees participated, receiving extended healthcare and stock vesting benefits. Coleman noted that more than 4,000 employees have been redeployed over the past year, including 500 this month, as Microsoft tries to reduce the need for job eliminations.