Microsoft, a leading technology company, has implemented significant workforce reductions as part of a corporate reorganization, with its gaming division experiencing the most impact.
Approximately 3,200 employees are set to depart Xbox during this fiscal year, with 1,600 layoffs already taking effect on Monday, July 6. In a memo to staff, Amy Coleman, Microsoft’s Executive Vice President, announced the elimination of around 4,800 positions, representing about 2.1% of the global workforce. She emphasized the company’s strategic focus on key priorities to better serve customers in a rapidly evolving industry.
Coleman noted that the eliminated roles are not being filled by artificial intelligence (AI) but acknowledged that AI is reshaping work processes. The restructure primarily affects Microsoft’s Commercial and Xbox divisions.
Asha Sharma, the newly appointed head of Xbox, described the global staff reductions as the most significant restructuring in Xbox’s history. In a statement, she revealed plans to reduce the team by approximately 3,200 throughout FY27, including 1,600 immediate job cuts and the transfer of four studios to new management.
As part of the reorganization, four Xbox game development studios – Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Lab – will be spun off. Past restructuring efforts by Xbox and Microsoft include a reduction of 2,000 job roles in 2024 and 9,000 job cuts in the previous year following increased investments in AI.