Microsoft announced a major job cut affecting 4,800 employees, representing 2.1% of its global workforce, as part of a broad restructuring effort. The Xbox division alone will reduce its staff by approximately 3,200 people through fiscal year 2027, according to statements from Xbox CEO Asha Sharma and Microsoft officials on July 6.
The layoffs follow an internal 'Xbox Reset' memo and are aimed at addressing weak margins and reviving the gaming business. Asha Sharma acknowledged the challenges facing Xbox, describing the business as 'not healthy.' Microsoft’s Chief People Officer Amy Coleman highlighted the rapid transformation in technology deployment as a factor behind the workforce reduction in a message to employees.
This round of cuts is considered the largest single layoff cycle in gaming history, reflecting Microsoft’s strategic shift to cut costs amid evolving technology trends, including artificial intelligence. The company is also planning to spin off four video game development studios and separate from a fifth, signaling a significant reorganization of its gaming assets.
Microsoft’s restructuring and job cuts were publicly confirmed on July 6, with the company emphasizing the need to adapt to fast-changing technology landscapes. The Xbox division’s workforce reduction of 3,200 employees is scheduled to continue through fiscal year 2027, marking a substantial shift in its operational focus.