Microsoft’s logo and signage are seen outside its main office in Redmond, Washington (AP Photo/Jason Redmond, File)
Microsoft has announced one of its biggest job cuts in recent years, letting go of around 9,000 employees across various departments — including its popular Xbox gaming unit and sales division. This is the company’s second large-scale layoff in just a few months and marks its most significant workforce reduction since 2022.
The tech giant started informing affected employees on Wednesday. About 830 of those layoffs are tied to Microsoft’s Redmond, Washington headquarters, as confirmed by documents sent to local authorities. But the impact isn’t limited to the U.S. — teams around the globe are facing job losses.
Microsoft stated that these changes are part of ongoing "organizational adjustments" aimed at staying competitive in today’s fast-moving market. While the company hasn’t confirmed the exact total, it shared that the cuts account for roughly 4% of its workforce from a year ago. With 228,000 employees reported as of June 2024, that means nearly 9,000 people are being let go.
In a note to staff, Xbox CEO Phil Spencer explained that the job reductions are intended to set up the gaming division for long-term success. According to him, Xbox is aligning with Microsoft’s broader strategy of reducing layers of management to work more efficiently.
This move is part of a larger trend within Microsoft. Earlier this year, the company also laid off about 6,000 people in May — nearly 3% of its global workforce. Most of those roles were in software development and product management. In fact, only a few weeks ago, 300 more employees at Redmond lost their jobs.
Microsoft’s Chief Financial Officer Amy Hood said in an April earnings call that the company is prioritizing high-performing teams and aiming to streamline operations by reducing layers of management.
These layoffs come at a time when Microsoft is investing heavily in artificial intelligence and cloud infrastructure. It spent nearly $80 billion in the past fiscal year on data centers, advanced chips, and technology to support its AI goals. The new fiscal year just started this week, but cost-cutting seems to be continuing.
There are also growing concerns among industry watchers and employees that Microsoft’s AI tools, especially those that help write code, may be part of the reason for the tech layoffs — particularly in engineering roles.
CEO Satya Nadella hinted earlier that around 20–30% of code in some company projects is now written by AI, suggesting that fewer human programmers may be needed in the future.
According to Wedbush Securities analyst Dan Ives, Microsoft appears to be shifting resources away from older divisions like Xbox and focusing more on high-growth areas like AI and cloud services. He noted that the company may have overhired in past years and is now making tough choices to stay lean and efficient.
This is a sharp turn for Microsoft’s gaming ambitions. The company spent billions in recent years acquiring gaming studios — including the $75.4 billion takeover of Activision Blizzard and $7.5 billion purchase of ZeniMax Media, the parent of Bethesda Softworks. Many of these studios are now dealing with the aftermath of layoffs, as seen in emotional posts from staff on social media.
The cuts serve as a sobering reminder that even tech giants are not immune to economic pressures — and that the push toward AI and automation is already reshaping jobs across the industry.
