Microsoft Expected to Lay Off 2.5% of Staff Across Key Teams to Fund AI Expansion
In Focus
- The latest wave of layoffs will affect the Xbox division significantly
- Microsoft is expected to announce the job cuts next week
- The tech giant laid off 6,000 employees in July 2025
Microsoft is preparing to reduce its workforce about 2.5% in a new round of layoffs. The layoffs will reportedly affect roles across the company. The Windows-maker is expected to announce the layoffs as early as next week. News about the impending layoffs at Microsoft come at a time when firms across the technology, finance, and media sectors seek to invest more in AI infrastructure. By mid this year, major tech companies had laid off more than 142,000 employees.
Which Teams Will be Affected by Microsoft’s Latest Layoffs?
Current reports indicate that employees in areas such as sales and consulting will most likely be affected by the upcoming workforce reduction. The Xbox division is also expected to face significant layoffs.
The company is reportedly planning substantial reductions to the marketing and operational budgets in the division, as it continues to streamline the gaming business. Microsoft’s Xbox layoffs come after the company increased console prices globally. The tech giant attributed the price hike to rising game development and operating costs.
Microsoft is yet to disclose the exact number of employees who will be affected. However, a workforce reduction of less than 2.5% would translate to several thousand jobs considering approximately 228,000 employees worked in the tech company as of 30 June 2025.
Although significant, the cuts are expected to be smaller than the company’s previous major round of layoffs.The reported reduction is also lighter than Microsoft’s July 2025 layoffs, when the company laid off nearly 4% of its global workforce.
Has Microsoft Previously Implemented Other Layoffs?
Microsoft’s latest workforce reductions will be an extension of layoffs that the company has previously implemented. In May 2025, the company implemented a 6,000 job cut program. A few months later, Microsoft laid off 9,000 employees, representing about 4% of the company’s global workforce
Earlier this year, the company introduced a voluntary retirement programme for eligible U.S. employees. Approximately a third of employees who were offered buyouts accepted them. The programme, which targeted long tenured staff, reduced the need for deeper compulsory layoffs. This allowed Microsoft to implement a smaller workforce reduction program this year than it did last year. The new wave of Microsoft layoffs comes about two months after Meta laid off 8,000 employees in a bid to run the company more efficiently while offsetting its AI investments.
What Do Employee Layoffs Mean for Microsoft?
The upcoming layoffs reflect a shift to Microsoft’s strategic direction. Although the tech company continues to generate strong profits, it is investing heavily in artificial intelligence, including AI infrastructure, data centers, and advanced computing capabilities. Microsoft is restructuring parts of its business and reducing costs in selected areas to finance these investments.
