Microsoft cuts 4,800 jobs across sales and Xbox divisions

Microsoft announced plans to lay off approximately 4,800 employees — representing 2.1% of its global workforce — on Monday, confirming an earlier report by Business Insider.

Affected Divisions

The cuts primarily impact the sales and Xbox gaming organizations, according to an email sent to employees by Microsoft HR Chief Amy Coleman.

Historical Context

Microsoft typically reduces its workforce around the start of its new fiscal year on July 1. Last year, the company eliminated:

• 6,000 roles in May
• 9,000 roles (approximately 4% of the workforce) in July

Prior to the latest cuts, Microsoft employed more than 220,000 people.

Financial Pressures and AI Investment

Microsoft is cutting costs while spending heavily on AI infrastructure, amid growing investor concerns that AI could disrupt traditional software. These worries contributed to a 19% decline in Microsoft's stock price in June — its worst monthly performance since the dot-com era.

Voluntary Retirement Program

Earlier this year, Microsoft offered a voluntary retirement program providing buyouts to employees at level 67 and below in the U.S. who had 70 or more years of service.

According to a person familiar with the program:

• Approximately one-third of the nearly 9,000 eligible employees accepted the buyout
• This outcome was in line with expectations
• The program enabled Microsoft to cut a lower percentage of its workforce compared to last year

Broader Industry Trends

Microsoft's latest layoffs reflect a broader balancing act across Big Tech. While companies invest record amounts in AI infrastructure, they are also seeking to offset those costs by trimming workforces and improving operational efficiency. Recent layoffs include:

• Meta: Approximately 8,000 employees (10% of total workforce) in May
• Amazon, Coinbase, Google, and Block: Have also conducted layoffs in recent months

Full Memo from Amy Coleman to Employees

When I stepped into this role, I promised to communicate more openly with you and share the "why" behind our decisions.

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Today we are eliminating around 4,800 roles, about 2.1% of our global workforce, as we focus our people, investments, and energy on the priorities that will keep Microsoft positioned to deliver for customers in a fast-changing industry. The people whose jobs are impacted today are our colleagues and friends. They have made meaningful contributions to Microsoft, and we are deeply grateful for everything they have done.

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Decisions like these are never easy, and you have my commitment that we are constantly looking for ways to reduce the need for job eliminations. Whenever possible, our priority is to place people into new roles aligned to the company's highest priorities and greatest areas of opportunity. Over the past year, we have redeployed more than 4,000 employees into new roles, including another 500 this month. We will also transition four of our gaming studios to operate independently under new management, with the goal of preserving both their intellectual property and ongoing projects. In addition, more than 30% of eligible employees chose to participate in our recent voluntary retirement program, and we will continue exploring similar approaches in the future. While this doesn't change the difficulty of today's news, we will continue to do everything we can to create opportunities for our people, reduce the need for job eliminations where possible, and responsibly support those affected with care and respect.

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The "why" is this: our business is changing because the world around it is changing. The way technology is built, deployed, and used is transforming faster than at any point in my time here. Our customers' needs are shifting, the business models that serve them are shifting, and that means the work itself — what we do, where we focus, and how we're organized — has to transform too. Companies don't get to choose whether their industry changes; they only get to choose whether they change with it. That means we will need to adjust resources and roles and shift how we operate so we can have the greatest impact for our customers.

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I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves. Our customers are navigating this same shift, and they're counting on us to help them through it. We can't do that well unless we're doing it ourselves. This comes down to two commitments: making the decisions needed to drive differentiated customer value, and supporting the people affected by them.

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First, we will make the hard changes required to build differentiated products and services that deliver differentiated customer value. We are aligning our investment, people, and energy to our business priorities. Today's changes mostly impact our Commercial and XBOX organizations.