Microsoft to Announce Major Layoffs Next Week, Marking Fourth Largest in 18 Months

Microsoft is reportedly preparing for another major round of layoffs, this time targeting its Xbox division. This planned restructuring is part of a broader effort to reorganise the company before the end of its financial year on June 30. If executed, it would mark Microsoft’s fourth significant layoff in the past 18 months. The decision comes amid mounting pressure for the company to streamline operations and focus more on profitability, especially following its $69 billion acquisition of gaming giant Activision Blizzard in 2023.

Sources familiar with the matter told Bloomberg that several teams within the Xbox group will be affected, although the exact number of job losses remains unknown. The layoffs are anticipated to be substantial and are expected to be announced early next week. This timing aligns with Microsoft’s typical practice of implementing structural and personnel changes toward the end of its fiscal year. Beyond Xbox, the layoffs may also impact employees working in Microsoft’s global sales operations.

Over the past year, Microsoft’s Xbox division — responsible for the company’s gaming consoles, game development studios, and digital services like Game Pass — has already experienced multiple waves of job cuts. In 2023, Microsoft shut down some of its gaming subsidiaries and underwent major staffing adjustments. With the Activision Blizzard acquisition now finalized, Microsoft appears to be reassessing its gaming division's structure and cost management strategy.

However, the restructuring is not limited to the gaming sector. Bloomberg previously reported that Microsoft is planning broader cuts across several departments, including sales. In May 2024, around 6,000 employees, mainly from engineering and product teams, were laid off. Sales and marketing roles, largely unaffected in that round, could be targeted this time.

One of the primary drivers behind these cost-cutting measures is Microsoft’s aggressive investment in artificial intelligence (AI) and cloud infrastructure. The company has pledged billions of dollars to develop data centres and AI-driven services. In order to support these capital-intensive initiatives, Microsoft is seeking to optimise its expenditure in other business areas.

To further control costs, the company has begun outsourcing certain functions. For example, in April, Microsoft informed its employees that sales of some software products for small and medium-sized businesses would now be handled by third-party firms instead of internal teams. This move underscores Microsoft’s strategic shift towards prioritising technological innovation over operational expansion.

As of June 2024, Microsoft employed approximately 2.28 lakh (228,000) people globally, including around 45,000 in sales and marketing roles. Given the wide scope of the planned layoffs and the multiple teams involved, the upcoming job cuts are expected to be one of the most extensive internal reshuffles in recent memory.

While Microsoft has not officially confirmed the layoff plans, it has previously stated that it regularly reviews its workforce structure to ensure alignment with long-term goals. Recent internal communications and investor briefings have also signalled a strong focus on operational efficiency and tighter control of non-essential spending, suggesting that more changes could be on the horizon.