Microsoft plans layoffs under 2.5% of workforce amid AI shift, TechGig
Microsoft is preparing for another round of layoffs that could impact thousands of employees across its sales, consulting, and Xbox divisions, as the company continues to realign its operations towards artificial intelligence (AI). According to a report by Business Insider, the layoffs could be announced as early as next week, with the planned cuts expected to affect fewer than 2.5% of Microsoft’s global workforce, which numbered approximately 228,000 as of June 30, 2025.
This restructuring is part of Microsoft’s broader strategy to manage costs while significantly increasing its investments in AI infrastructure. The company has been allocating billions of dollars to enhance its AI capabilities, even as it faces scrutiny from investors regarding how the rapid adoption of AI may reshape its traditional software businesses. Some employees whose positions are eliminated may be offered alternative roles within the company immediately.
The Xbox gaming division is anticipated to be one of the most affected areas. Earlier reports indicated that Microsoft’s gaming business was preparing for substantial job cuts alongside reductions in marketing and operational budgets. Additionally, Microsoft has been exploring strategic options for Xbox, including the potential restructuring of the business or operating it as a wholly owned subsidiary.
Prior to these layoffs, Microsoft had introduced a voluntary retirement program for eligible US-based employees below senior leadership positions, with around one-third of eligible employees reportedly accepting the offer. However, employees in commission-based sales roles were excluded from this program.
Historically, Microsoft has announced organizational changes and workforce reductions at the beginning of its fiscal year, which starts on July 1. In 2025, the company executed multiple rounds of layoffs, eliminating around 6,000 jobs in May and another 9,000 in July, which together accounted for roughly 4% of its workforce. Microsoft has not publicly confirmed the latest reported restructuring plans.
