Microsoft’s long-standing biggest layoffs hit Xbox, sales and other divisions

Microsoft says it has fired about 9,000 workers, has sacked its second mass layoff and the largest in more than two years.

The tech giant began sending layoff notifications on Wednesday, hitting the company’s Xbox video game business and other divisions.

According to a notification sent to state officials on Wednesday, some of the people who lost their jobs are 830 workers tied up at Microsoft’s headquarters in Redmond, Washington.

Microsoft said the cuts will affect multiple teams around the world, including sales units, which are part of the “organizational changes” needed to succeed in the “dynamic marketplace.” The company has not stated the total number of layoffs, except that it was about 4% of its workforce a year ago.

A note from Xbox CEO Phil Spencer to gaming staff on Wednesday said the cut would position the video gaming business “to endure success and focus on strategic growth areas.”

Xbox “follows Microsoft’s leads in removing the management tier to increase agility and effectiveness,” Spencer wrote.

Microsoft employed 228,000 full-time workers as of June 2024. According to Microsoft, its latest layoffs will cut under 4% of its workforce. However, there have already been at least three layoffs this year, and it is unlikely that new jobs will match the amount lost. In any case, the 4% cut is somewhere in the 9,000 range.

So far, the biggest layoff of the year was in May, when Microsoft began to begin the largest job cuts in over two years, with around 6,000 workers, almost 3% of the global workforce.

The cuts will be made as Microsoft continues to invest huge sums of money in data centers, specialized computer chips, and other infrastructure needed to advance its AI ambitions. The company expected these costs to cost around $80 billion in last fiscal year. That new fiscal year began on Tuesday.

Last month, Microsoft set 300 Redmond headquarters-based workers from Redmond headquarters, according to information sent to Washington state employment officials.

In its revenue call in April, Amy Hood said the company is focusing on “building and agile high-performance teams by reducing the number of layers with fewer managers.”

The company has repeatedly characterized recent layoffs as part of its management layer trim, but focusing on reducing software engineering employment has encouraged concerns about how the company’s own AI code creation products can reduce the number of people needed for programming tasks.

Microsoft CEO Satya Nadella said about some of Microsoft’s coding projects, “probably everything is written by software,” Microsoft’s coding project “20, 30% of code,” earlier this year.

However, the latest layoffs appeared to be centered around regions where the company’s business is growing slowly, said Wedbush Securities analyst Dan Ives.

“They are increasingly focused on AI, the cloud, and the next generation of Microsoft, and are really looking to cut back on Xbox and some of the legacy areas,” Ives says. “I think they’ve been fulfilled over the years. This makes sure Nadella and the team are still efficient, and that’s the name of the Wall Street game.”

The trimming of Xbox staff came to a culmination in 2023 with the $75.4 billion acquisition of Activision Blizzard, the maker of hit franchises such as Call of Duty and Candy Crush, following Microsoft’s years of expansion in the business surrounding gaming consoles.

Before that, it spent $7.5 billion to acquire Zenimax Media, the parent company of Maryland video game publisher Bethesda Softworks, to compete with Sony’s PlayStation.

Many game studios with locations across North America and Europe struggled with layoffs on Wednesday, according to a social media post from employees who announced they were looking for new jobs.

©2025 Associated Press. Unauthorized reproduction is prohibited. This material will not be published, broadcast, rewritten or redistributed without permission.