Microsoft Cuts 4,800 Jobs, Slashes 20% of Xbox Workforce Amid Tech Shift

Microsoft announced a new round of layoffs affecting 4,800 employees, representing about 2.1% of its global workforce. The gaming division Xbox will be hit hardest, with approximately 20% of its staff cut. Xbox CEO Asha Sharma revealed that 3,200 positions will be eliminated by fiscal year 2027, with 1,600 layoffs occurring immediately and another 1,600 planned later as part of a broader efficiency initiative.

Amy Coleman, Microsoft’s Chief Human Resources Officer, explained to employees that rapid technological changes, especially advances in artificial intelligence (AI), are reshaping how technology is developed and used. While AI is not directly replacing workers, it is automating tasks and requiring employees to adapt their skills. Coleman noted this is the fastest pace of change she has witnessed in her 27 years at the company.

As part of the restructuring, four game studios will be separated from Microsoft. Compulsion Games and Double Fine Productions will return to independent status, while Ninja Theory and Undead Labs will be sold to new owners. Arkane Studios, acquired through the $8.1 billion ZeniMax Media deal in 2021, is exploring strategic options with its French employee representatives.

Microsoft launched a voluntary retirement program in the U.S. in April targeting senior managers and above, with over a third of eligible employees already accepting the offer. Despite growth in cloud services and LinkedIn, revenue declines in Windows, Surface devices, and Xbox have pressured the company to reduce costs. This latest layoff wave follows previous cuts of 9,000 jobs last year and aligns Microsoft with other tech giants like Oracle, Meta, and Amazon that have also downsized recently.

It remains unclear how many employees in Israel will be affected by these layoffs.