Microsoft is set to initiate a fresh wave of layoffs next week, with the Xbox division expected to bear the brunt of the cuts. While the exact number of impacted employees has not been officially disclosed, media reports suggest this could be the company’s largest layoff round in over 18 months.
The upcoming job cuts are part of an ongoing restructuring effort at Microsoft, which may also affect teams involved in global sales operations. The Xbox division—which oversees Microsoft’s gaming consoles, Game Pass services, and game development studios—is expected to face the most significant impact. Notably, this is not the first time Xbox-related roles have been targeted.
In January 2025, Microsoft implemented layoffs across various departments. This followed a major workforce reduction in early 2023, which saw 10,000 employees let go in response to changing market dynamics. Again in January 2024, the gaming division saw 1,900 roles eliminated as part of a post-acquisition realignment following Microsoft’s $75.4 billion purchase of Activision Blizzard.
The tech giant also toughened its stance on performance management in April 2025. Employees labeled as low performers were given two choices: join a performance improvement plan or exit the company. Additionally, such employees were barred from internal transfers and rehires for a period of two years.
In May 2025, Microsoft reportedly laid off around 6,000 employees, primarily from its engineering and product teams. Alongside these moves, the company has increasingly outsourced select functions as part of broader cost-cutting initiatives.
Amidst these efforts, Microsoft continues to double down on its investments in artificial intelligence (AI), aiming to streamline operations while driving innovation in emerging technologies.
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