Microsoft Lays Off 9,000 in Major Workforce Cut \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Microsoft has announced another round of mass layoffs, cutting approximately 9,000 employees, or nearly 4% of its workforce. The layoffs impact the Xbox division, sales teams, and software engineering roles. This marks Microsoft’s largest job cut in over two years as it refocuses on AI and cloud infrastructure.
Quick Looks
- Microsoft lays off about 9,000 workers globally
- Xbox division, Redmond headquarters, and sales hit hardest
- Cuts represent nearly 4% of the 2024 workforce
- Second large round of layoffs in two months
- Microsoft shifting focus toward AI, cloud investments
- $80 billion projected spend on AI infrastructure this fiscal year
- CFO says move aims to flatten management, improve agility
- Layoffs follow massive gaming acquisitions including Activision Blizzard
Deep Look
Microsoft has begun a sweeping round of layoffs impacting about 9,000 employees across its global workforce, marking the company’s most significant job reduction in over two years. The layoffs affect multiple business units, with major cuts in its Xbox video game division, global sales teams, and its Redmond, Washington headquarters.
The layoffs began Wednesday, according to sources familiar with the matter, and represent nearly 4% of Microsoft’s workforce as of June 2024, when the company reported 228,000 full-time employees. Notices were sent to Washington state officials confirming that 830 of the affected workers are based at the Redmond campus alone.
The layoffs follow a series of workforce reductions at Microsoft throughout 2025, including a previous wave in May that saw approximately 6,000 jobs cut. Combined with smaller rounds in earlier months, Microsoft has now eliminated over 15,000 roles this year—an unprecedented shake-up for the tech giant in such a short span.
While Microsoft has not publicly disclosed the full number of jobs cut in this latest round, spokespersons confirmed that the decision was part of broader “organizational changes” required to stay competitive in a rapidly evolving digital marketplace.
A memo sent to Xbox staff by gaming division CEO Phil Spencer underscored that the job cuts aim to increase operational agility. “This move positions Xbox for enduring success and allows us to focus on strategic growth areas,” Spencer wrote. He added that Xbox would align with Microsoft’s larger goal of “removing layers of management to increase agility and effectiveness.”
This strategic pivot comes at a time when Microsoft is doubling down on artificial intelligence and cloud computing. The company has committed more than $80 billion to build out its AI infrastructure, including advanced data centers and specialized chips, in its new fiscal year that began July 1.
Microsoft’s Chief Financial Officer Amy Hood highlighted the company’s shift in April, telling investors that the company is streamlining operations to “build high-performing teams and increase our agility by reducing layers with fewer managers.”
These statements suggest that Microsoft’s long-term strategy involves not only technological advancement but also organizational restructuring—leaning into a flatter management model, with fewer layers of oversight.
Still, the layoffs have stoked concerns about the future of roles in software development, especially following Microsoft CEO Satya Nadella’s remarks earlier this year that “maybe 20, 30% of the code” in some of its projects is already written by AI. That, coupled with a May layoff round that hit software engineering and product management roles particularly hard, has triggered fears that Microsoft’s AI push could reduce the long-term need for human coders.
This most recent wave appears to target areas with slower growth or overlapping functions, according to industry analyst Dan Ives of Wedbush Securities. “They’re cutting costs around Xbox and some of the more legacy areas, while focusing more and more on AI, cloud, and next-generation Microsoft,” Ives said. “This is Nadella and his team tightening the ship.”
The timing of the Xbox layoffs is particularly jarring, given Microsoft’s massive investment in the gaming sector over the past few years. In 2023, the company completed a historic $75.4 billion acquisition of Activision Blizzard, adding top-tier titles like Call of Duty and Candy Crush to its portfolio. That followed a $7.5 billion purchase of ZeniMax Media, the parent company of Bethesda Softworks.
Despite these acquisitions, many studios acquired during this spree—spanning across North America and Europe—were affected by Wednesday’s cuts. Social media platforms were flooded with posts from displaced game developers, designers, and QA testers looking for new roles, further signaling the widespread nature of the restructuring.
The reductions also extend beyond the gaming realm. Microsoft’s sales teams have seen layoffs across international markets, with employees confirming job losses on LinkedIn and other professional networks. These roles, often responsible for cloud services and enterprise solutions, are also being streamlined as Microsoft automates more of its business-client interfaces.
Microsoft’s decision to implement multiple large-scale layoffs in a single year contrasts with its historical employment growth. While tech companies broadly cut jobs during the 2022 and 2023 market slowdowns, Microsoft remained relatively stable. That trend has now reversed, as the company aggressively realigns its structure for the next era of AI-driven services.
Microsoft’s strategy appears to follow a broader industry pattern. Companies like Google, Meta, and Amazon have also restructured, emphasizing fewer layers of management and increased reliance on AI technologies.
However, Microsoft’s cuts are notable in both scale and frequency—now affecting nearly one in every 25 employees in the span of a few months. While these moves may satisfy investors looking for cost-cutting discipline, they also raise critical questions about morale, corporate culture, and the long-term impact of automation on tech sector employment.
With the layoffs now underway and more details likely to emerge in the coming weeks, Microsoft faces the challenge of maintaining its reputation as a stable tech employer while pushing aggressively into AI and next-gen cloud services.
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