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Microsoft is preparing another round of layoffs that will affect thousands of employees across its global workforce, including its Xbox gaming division, as the technology giant seeks to curb costs while continuing to invest heavily in artificial intelligence (AI), Business Insider reported on Wednesday.
According to the report, Microsoft could announce the job cuts as early as next week. The layoffs are expected to affect fewer than 2.5 per cent of the company’s approximately 220,000 employees worldwide, making the latest round smaller than last year’s reductions, the report said.
The cuts are expected to impact employees in sales and consulting teams, as well as staff in Microsoft’s Xbox gaming business. Some affected workers may be offered alternative roles within the company immediately after the layoffs are announced, the report said.
The move comes as Microsoft begins its new fiscal year, a period during which the company has historically undertaken workforce restructuring. Last year, Microsoft cut around 6,000 jobs in May before eliminating another 9,000 positions in July, representing roughly 4 per cent of its workforce.
The latest restructuring reflects Microsoft’s broader efforts to balance rising AI investments with tighter cost controls. Like several other major technology companies, Microsoft has been spending billions of dollars on AI infrastructure, data centres and product development while facing increasing scrutiny from investors over profitability.
The company has also faced pressure from Wall Street amid concerns that advances in generative AI could disrupt traditional software services, including products offered by Microsoft itself. According to the report, Microsoft’s stock has fallen about 17 per cent over the past month.
Earlier this year, Microsoft introduced a voluntary retirement programme for eligible US employees, offering buyout packages to staff at level 67 and below whose combined age and years of service totalled at least 70. Nearly 9,000 employees — around 7 per cent of Microsoft’s 125,000-strong US workforce — qualified for the programme.
About one-third of eligible employees accepted the buyout offer, in line with the company’s expectations, one of the people cited by Business Insider said. The higher-than-expected participation reportedly allowed Microsoft to reduce the scale of involuntary layoffs compared with last year.
Sales employees who receive commission-based compensation were excluded from the voluntary retirement programme, according to an internal document reviewed by the publication.
Xbox under mounting pressure
The reported layoffs come at a challenging time for Microsoft’s gaming business, which has been grappling with rising hardware costs and broader restructuring efforts.
Earlier this month, Reuters reported that Xbox would raise prices of its gaming consoles worldwide from August 1, citing a worsening global components shortage that has sharply increased storage and memory costs across the consumer electronics industry.
Under the revised pricing, Xbox consoles with 512 GB of storage will cost $100 more, while 1 TB models will see a $150 increase. Microsoft will also discontinue the 2 TB version. The company said storage and memory prices have risen by more than 2.5 times and warned they could double again by the fall of 2027.
The price increases follow two previous Xbox price hikes last year as Microsoft navigated tariff-related cost pressures, intense competition and cautious consumer spending. Rival Sony also increased prices for its PlayStation 5 consoles in April after a similar hike last August, while Apple recently raised prices for several iPad and MacBook models, citing surging memory and storage chip costs driven by AI-related data centre demand.
Reports of further restructuring at Xbox have also been mounting. Earlier this month, Bloomberg News reported that Microsoft was planning major layoffs within the gaming division alongside significant reductions to marketing and other budgets. Xbox chief executive Asha Sharma had also told employees the business needed a “reset”, signalling broader organisational changes as Microsoft looks to improve efficiency.
Microsoft has not officially announced the latest layoffs, and the timing or scope of the planned cuts could still change, according to the Business Insider report. The company has not publicly commented on the matter.
With inputs from agencies.
