Microsoft has announced that it will cut around 4,800 jobs, or about 2.1% of its global workforce, as the company restructures its business around artificial intelligence (AI) priorities. The Xbox gaming division will see the biggest impact, with plans to reduce its workforce by around 3,200 employees, or nearly 20%, during FY27.
As part of the announcement, Microsoft’s Executive Vice President and Chief People Officer, Amy Coleman, said the company is “eliminating around 4,800 roles” to “focus our people, investments, and energy on the priorities that will keep Microsoft positioned to deliver for customers in a fast-changing industry.” She also said that none of the affected roles would be replaced by AI.
The layoffs will affect multiple parts of Microsoft’s business, including its commercial sales and consulting teams. Around 600 of the affected employees are based in Washington state, where the company’s headquarters in Redmond is located.
The largest job cuts will take place in the Xbox division. In a separate message to employees, Xbox CEO Asha Sharma said she had made “the challenging choice to decrease our team by roughly 3,200 throughout FY27.” Around 1,600 jobs will be eliminated immediately, while the remaining reductions will happen over the next 12 months.
As part of the restructuring, Microsoft is divesting four Xbox studios and is considering the sale of another studio as it reshapes its gaming business.
The latest layoffs follow another round of job cuts a year ago, when Microsoft reduced its workforce by around 9,100 employees.
Layoffs have continued to rise across the technology sector. According to Challenger, Gray & Christmas, tech companies announced 139,156 layoffs during the first half of 2026, an 83% increase compared with the same period last year. The firm said AI-related restructuring has become the leading driver behind these workforce reductions.
Microsoft’s shares fell following the announcement. The company said it will provide affected employees with financial support and career transition assistance.
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