Microsoft is preparing a new, massive wave of layoffs that will affect thousands of employees around the world at the very beginning of the company’s new fiscal year. According to the information transmitted by the leading business media citing well-informed insiders, Microsoft plans to reduce the total number of employees by a little less than 2.5%.
Given that Microsoft currently employs around 228,000 people, this decision means that approximately 5,500 workers will lose their jobs. This is a continuation of the corporate reorganization started last summer (in July 2025), when the company laid off about 4% of the total workforce (close to 9,000 people).
Sales, consulting and Xbox are under attack
Although the cuts will be felt in different sectors of the company, the main hit will be the sales and consulting departments, as well as Xbox.
The situation in the Xbox division is causing the most concern among analysts and the industry. The new director, Asha Sharmarecently sent an internal memo to employees in which she openly requested urgent business reset and change of strategy. On that occasion, she revealed that the profit margin of this sector had fallen to a critical 3%.
Over the past five years, Microsoft has spent more than $20 billion on developing gaming content and subsidizing hardware (not counting the giant Activision Blizzard acquisition), while the division’s annual revenue has simultaneously dropped by nearly half a billion dollars.
In an attempt to stop losses, Microsoft recently raised the global prices of its Xbox consoles for the third time within a year (by $100 to $150), justifying it by a drastic jump in the prices of memory and supporting components on the world market. The new cuts are expected to bring drastic reductions in marketing budgets, cancellations of certain games, and even potential closures or mergers of some internal gaming studios.
Replacing people with machines?
Although Microsoft officially refuses to comment on these allegations, the company’s strategy fully reflects a trend that has engulfed the entire silicon sector. In the same atmosphere, Meta and Amazon have already fired tens of thousands of workers this year.
Tech giants are shifting billions of dollars en masse from operating salary costs to capital investments. All money is directly invested in building AI data centers, buying graphics chips and developing AI software.
In internal circles, the company’s management is increasingly emphasizing that advanced AI agents and integrated assistant co-pilot are becoming so effective that they simply make many traditional and administrative roles in the corporate chain obsolete and technologically redundant.
Partial mitigation of this wave of layoffs was achieved thanks to the first official voluntary retirement program in Microsoft’s 51-year history. The program was launched in April this year, and about a third of older workers who met the conditions accepted the offered severance pay. To some extent, the final number of people who will be fired is thus reduced, concludes GSMArena.