Microsoft confirmed this week that it is laying off up to 9,000 employees—approximately 4% of its global workforce—as part of ongoing organizational changes aimed at streamlining operations and focusing on key growth areas.
The latest round of layoffs follows several workforce reductions over the past year.
The cuts, which span multiple teams and global offices, will notably impact Microsoft’s gaming division, including Xbox, and certain European operations. According to internal communications shared by Microsoft Gaming CEO Phil Spencer, the company will reduce or discontinue some projects and flatten layers of management to enhance efficiency.
“To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business,” Spencer said in a memo to employees.
He acknowledged the company’s growth but emphasized the importance of prioritizing initiatives with the greatest long-term potential.
This move comes amid broader restructuring efforts across Microsoft. Since early 2024, the company has laid off thousands of employees in multiple waves. In May, roughly 6,000 workers were affected, with an additional 300 job reductions in June. Earlier in the year, Microsoft cut about 1,900 positions from its Activision Blizzard and Xbox teams and eliminated roles in its HoloLens and Azure cloud units. The company has also shuttered several gaming studios and canceled projects, including the long-awaited title Everwild.
Microsoft is not alone in reducing headcount in 2025. Other tech and software firms, including Autodesk, Chegg, and CrowdStrike, have implemented layoffs in response to shifting market dynamics and cost management strategies.
The company stated the decision is part of a broader plan to align resources with business needs in a “dynamic marketplace.”
A Microsoft spokesperson added, “We continue to implement organizational changes necessary to best position the company and teams for success.”
The layoffs come just days into Microsoft’s 2026 fiscal year. As of June 2024, Microsoft employed about 228,000 people globally. While the latest cuts represent a small portion of that total, they follow a period of heightened investment—especially in artificial intelligence—that has reshaped the company’s product roadmap and business priorities.
Despite the workforce reductions, Microsoft remains financially strong. In its most recent quarterly earnings, the company reported nearly $26 billion in net income on $70 billion in revenue. Growth in its Azure cloud platform and enterprise software subscriptions continues to bolster investor confidence.
Microsoft shares recently hit a record high of $497.45 but edged down slightly following news of the layoffs. The company emphasized that impacted employees will receive severance benefits, continued healthcare coverage, and support in finding new roles, either within Microsoft or externally.
The Verge, CNBC, and the Associated Press contributed to this report.
