Microsoft to Cut 4,800 Jobs in Workforce Reduction

A year after laying off around 9,100 employees, Microsoft is initiating another round of job cuts as it kicks off its new financial year. Today, approximately 4,800 employees, or about 2.1 percent of its workforce, will be let go. The majority of those affected are from Microsoft’s commercial sales sector and the Xbox division.

In an internal memo, Amy Coleman, executive vice president and chief people officer, attributed the layoffs to the evolving technology landscape and the necessity to realign resources and roles in response to the impact of AI on companies like Microsoft. Coleman emphasized, “I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done.”

The layoffs will affect around 1,600 employees within the Xbox division, with plans to cut about 20 percent of Xbox jobs by the end of the financial year. Additionally, Microsoft is divesting four Xbox studios and considering the sale of another studio as part of a strategy to “reset” its Xbox business after facing challenges in recent years.

“Decisions like these are never easy, and you have my commitment that we are constantly looking for ways to reduce the need for job eliminations,” Coleman stated. “Whenever possible, our priority is to place people into new roles aligned to the company’s highest priorities and greatest areas of opportunity. Over the past year, we have redeployed more than 4,000 employees into new roles, including another 500 this month.”

To mitigate layoffs, Microsoft had also implemented a voluntary retirement program. US employees whose age combined with years of service totals 70 or more were eligible, receiving benefits such as five years of healthcare coverage, a lump sum cash severance, and six months of vesting for unvested stock options.

“More than 30 percent of eligible employees chose to participate in our recent voluntary retirement program, and we will continue exploring similar approaches in the future,” Coleman noted. “While this doesn’t change the difficulty of today’s news, we will continue to do everything we can to create opportunities for our people, reduce the need for job eliminations where possible, and responsibly support those affected with care and respect.”