Nearly 4,800 employees lose their jobs as Microsoft restructures its business and expands its AI strategy.
Microsoft has announced another major round of layoffs, eliminating nearly 4,800 positions across its global workforce as the technology giant continues to streamline operations and accelerate its investment in artificial intelligence.
The latest job cuts affect employees across the company’s commercial business organisations and Xbox division, representing about 2.1 percent of Microsoft’s global workforce. Employees learned of the decision through company-wide emails from Chief Human Resources Officer Amy Coleman.
The restructuring reflects Microsoft’s broader effort to reduce costs while concentrating resources on long-term growth areas, particularly artificial intelligence.
AI is changing work, but not replacing these roles
In her message to employees, Coleman acknowledged that artificial intelligence is fundamentally changing how work is performed across the company. However, she clarified that AI did not directly replace the positions eliminated in this round of layoffs.
She explained that many routine tasks can now be automated, making continuous learning and new technical skills increasingly important for employees as workplace demands evolve.
Coleman also said Microsoft remains committed to helping its workforce adapt by investing in AI training and professional development, even as it reduces headcount.
Cost-cutting follows another difficult year
The latest layoffs continue a pattern of workforce reductions at Microsoft.
Last year, the company eliminated nearly 9,000 jobs in July after cutting approximately 6,000 positions earlier in the year. The new reductions come as Microsoft seeks to lower operating costs while repositioning its business around strategic priorities.
The announcement also follows a difficult month for the company’s stock, which recorded its weakest monthly performance since December 2000 after falling about 19 percent in June.
Microsoft sharpens its focus on AI
According to Coleman, Microsoft is aligning its people, investments, and resources with initiatives that will strengthen the company’s position in an increasingly competitive technology industry.
That strategy builds on the recent launch of Microsoft Frontier Company, a $2.5 billion initiative designed to accelerate enterprise AI adoption. The programme will place approximately 6,000 engineering and industry specialists alongside customers to design, deploy, and continuously improve artificial intelligence systems based on measurable business outcomes.
Microsoft indicated that the restructuring within its commercial business organisation supports this broader strategic shift.
Xbox division sees the largest impact
The gaming business accounts for the majority of the workforce reductions.
Xbox Chief Executive Officer Asha Sharma said approximately 3,200 employees from the gaming division were affected. According to CNBC, the cuts represent about 20 percent of Xbox’s workforce.
Microsoft also announced significant organisational changes within its gaming portfolio. Compulsion Games and Double Fine Productions will become independent studios under new management, while Ninja Theory and Undead Labs will transition to new ownership structures.
The company said these changes are intended to preserve the studios’ intellectual property and allow existing game projects to continue.
Support for affected employees
Coleman said Microsoft will provide financial assistance and career transition resources to employees whose positions have been eliminated.
She added that the company continues to explore alternatives to job reductions where possible while expanding programmes that help employees develop AI-related skills.
Microsoft declined to provide additional comment beyond the statements issued by Coleman and Sharma.
Microsoft continues its transformation
The latest layoffs highlight Microsoft’s ongoing effort to reshape its business around artificial intelligence while controlling costs in a rapidly changing technology landscape.
Although the company insists AI did not directly replace the eliminated positions, its leadership has made clear that automation and AI-driven workflows will continue to influence how work is organised. As Microsoft expands its investment in artificial intelligence, employees across the organisation will face increasing pressure to develop new skills that match the company’s evolving priorities.
Photo: Adobe Stock
Source: Inc
