Microsoft has announced a fresh round of job cuts that will affect around 4,800 employees across its global workforce, representing nearly 2% of the company’s total staff. The decision is part of a broader restructuring exercise, with the gaming business set to see the biggest impact.
The company said the changes will be rolled out over the coming fiscal year.
Microsoft’s Xbox gaming operations
The restructuring is heavily focused on Microsoft’s Xbox gaming operations, marking what the company described as the most significant reorganisation in the history of the business.
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Microsoft had earlier this year offered voluntary separation packages to nearly 9,000 employees in the United States, accounting for around 7% of its US workforce. The company also typically reviews staffing levels toward the end of its fiscal year in June as it finalises spending priorities for the next financial year.
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While strong demand for artificial intelligence has continued to drive growth in Microsoft’s Azure cloud business, the massive investment required to build data centres supporting AI services has increased pressure on the company’s cash flows. Azure was the exclusive provider of OpenAI’s models until April.
$190 billion for 2026
Microsoft, which is scheduled to announce its quarterly earnings later this month, had projected Azure revenue for the quarter to exceed Wall Street expectations. At the same time, it unveiled a capital expenditure plan of $190 billion for 2026, significantly higher than market estimates.
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The company is also facing challenges in its software business as AI-powered tools increasingly automate routine workplace tasks. Meanwhile, higher memory chip prices, driven by growing demand from data centres, have increased production costs for Xbox consoles. Microsoft has responded by raising Xbox console prices despite already subdued demand.
Last month, Xbox gaming division chief Asha Sharma said the business required a “reset,” revealing that its profit margin had fallen to 3%, making restructuring unavoidable and leaving room for possible mergers and acquisitions.
“Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform and hardware subsidy, but our annual revenue has declined nearly half a billion during that time,” she said in an outspoken memo to employees published on Microsoft’s website. “Going forward, this cannot continue.”
(With inputs from agencies)
