Microsoft is set to lay off approximately 9,000 employees in what marks its second large-scale workforce reduction of the year and its most significant in over two years. The layoffs began on Wednesday and are expected to affect staff across multiple global divisions, including its Xbox gaming unit and sales teams.
The company confirmed that around 830 of the affected roles are based at its Redmond, Washington headquarters, according to a notice filed with state officials. Microsoft cited the need for “organisational changes” to stay competitive in a “dynamic marketplace” but declined to give a precise figure beyond noting the cuts represent about 4% of its workforce as of June 2024.
A memo from Xbox CEO Phil Spencer said the gaming division would follow broader corporate efforts to streamline operations by removing layers of management and refocusing on strategic growth areas.
The layoffs are part of a wider pattern. In May, Microsoft announced plans to cut around 6,000 jobs, or nearly 3% of its global headcount, followed by another 300 job losses in June. The recent move brings this year’s total job cuts to over 15,000, with most concentrated in slower-growth areas such as Xbox, even as the company continues to expand into artificial intelligence and cloud computing.
Microsoft reported employing 228,000 full-time workers as of June 2024. While the latest cuts represent a relatively small percentage of that total, analysts suggest the reductions point to a longer-term shift in focus. “They’re cutting costs around Xbox and other legacy areas while doubling down on AI and cloud,” said Dan Ives, an analyst at Wedbush Securities.
The company has continued to invest heavily in AI infrastructure, expecting to spend up to $80 billion in the previous fiscal year alone on data centres and specialised chips. This renewed emphasis comes amid growing scrutiny of the role AI is playing in reducing the need for traditional software development roles. In May, a significant portion of job losses were reported in software engineering and product management.
Microsoft has previously acknowledged that its AI tools have begun to automate parts of the software development process. CEO Satya Nadella earlier stated that 20–30% of code in some internal projects is already being generated by AI systems.
The cuts also follow a period of rapid expansion in the company’s gaming division. In 2023, Microsoft finalised its $75.4 billion acquisition of Activision Blizzard, adding popular titles like Call of Duty and Candy Crush to its portfolio. This came after a $7.5 billion deal to acquire ZeniMax Media in 2020.
Now, many studios acquired in recent years are reportedly experiencing staff reductions, with developers across North America and Europe taking to social media to share news of job losses. The latest wave of layoffs is part of what Microsoft describes as a broader effort to improve efficiency and reduce complexity across its global operations.
