Microsoft Announces 4,800 Job Cuts, Major Reductions in Xbox Division

Microsoft has announced a new round of layoffs affecting approximately 4,800 employees, representing about 2.1% of its workforce. The most significant impact will be on the Xbox division, which plans to cut around 20% of its staff. According to an internal memo, the Xbox division will reduce 3,200 positions by fiscal year 2027, with 1,600 employees leaving in the initial phase and another 1,600 in subsequent stages.

Amy Coleman, Microsoft’s Chief Human Resources Officer, addressed employees highlighting the rapid pace of change in the technology industry, the fastest she has witnessed in her 27 years at the company. She emphasized that artificial intelligence (AI) is transforming how technology is developed, operated, and used, requiring the company to adapt its organizational structure accordingly. While the layoffs are not a direct result of AI replacing workers, Microsoft acknowledges that AI is changing job roles, enabling task automation, and necessitating new skill acquisition.

In April, Microsoft launched a voluntary retirement program for certain management-level employees in the United States, with over a third of eligible employees already accepting the offer. This latest layoff wave follows previous cuts totaling about 9,000 employees over the past year. Despite ongoing growth in cloud services and LinkedIn, divisions such as Windows, Surface, and Xbox continue to face revenue declines. It remains unclear how many employees in Israel will be affected by the current layoffs, if any.