Microsoft has announced another round of layoffs, cutting 4,800 jobs—about 2.1% of its global workforce—as the company restructures its operations to adapt to rapid changes in the technology industry.
The latest cuts will have a significant impact on Microsoft’s gaming division, with Xbox accounting for a significant share of the job losses.
According to Microsoft, more than 1,600 employees at Xbox will lose their jobs immediately.
In addition, another 1,600 roles will be eliminated as part of a broader restructuring of the gaming business.
Xbox chief executive Asha Sharma, who recently assumed the role, described the move as the biggest organisational shake-up in the brand’s history.
“We are beginning the most significant restructure in Xbox history,” Sharma told employees in a memo shared on X.
As part of the overhaul, Microsoft confirmed that four Xbox game development studios will be separated from the company:
- Compulsion Games
- Double Fine Productions
- Ninja Theory
- Undead Labs
The restructuring is intended to streamline Xbox’s operations while allowing the studios to pursue their own paths.
Despite the scale of the changes, Sharma insisted the company’s long-term ambitions remain unchanged.
“These changes are about a bigger future for Xbox, not a smaller one.”
She added:
“History is full of companies that mistake longevity for inevitability. We will not be one of them.”
Company-wide, Microsoft said the layoffs reflect the need to adapt to shifting customer expectations and an increasingly competitive technology landscape.
In a memo to employees, Executive Vice President Amy Coleman explained:
“Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it.”
She added that Microsoft must focus its resources on areas that deliver the greatest value for customers in a rapidly evolving market.
Addressing concerns that artificial intelligence was directly replacing employees, Coleman clarified that AI was not being used as a one-for-one replacement for the affected roles.
However, she acknowledged that AI is transforming how work is performed across the company.
“What is true is that AI is changing how work gets done.”
The announcement marks Microsoft’s latest workforce reduction as the company continues investing heavily in artificial intelligence, cloud infrastructure and enterprise technologies.
Like several major technology firms, Microsoft has been reshaping its business in response to changing market conditions while directing billions of dollars toward AI development and deployment.
The restructuring signals a renewed focus on long-term growth, even as it results in significant job losses across parts of the business, particularly within the Xbox gaming division.
