REDMOND (dpa-AFX) - Microsoft (MSFT) has announced the layoff of around 4,800 employees, which is about 2.1% of its total global workforce. This is happening as the tech giant undergoes some major restructuring while ramping up its investments in artificial intelligence.
This latest round of job cuts is among the biggest we've seen from the company this year, particularly impacting its Xbox gaming division and commercial sales teams.
Out of the layoffs, about 1,600 positions are from Xbox, which is facing, in the words of Xbox CEO Asha Sharma, its 'most significant restructure in Xbox history.' The gaming division has been feeling the pinch with low profit margins, slower-than-expected growth in programs like Game Pass, and a tough market for gaming hardware.
Microsoft aims to streamline Xbox by cutting down on management layers, honing in on its core franchises, and reorganizing a few gaming studios either under new leadership or independent management. Chief People Officer Amy Coleman mentioned that while the layoffs aren't a direct result of AI replacing jobs, it's clear that AI is changing how tasks are done, automating routine work and pushing employees to pick up new skills.
Over the past year, Microsoft has managed to redeploy more than 4,000 employees into new roles and intends to keep providing opportunities for reskilling and internal placement.
These job cuts are happening as Microsoft steps up its enterprise AI efforts through its Frontier Company unit, which mirrors a wider trend in the tech industry where businesses are cutting jobs while significantly boosting their investments in AI.
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