Technology giant Microsoft has eliminated approximately 4,800 roles, representing 2.1% of its global workforce, as part of a major restructuring that has hit its Xbox video game division particularly hard. On Monday, July 6, 1,600 Xbox employees were laid off, with an additional 3,200 job cuts planned throughout the 2027 financial year.
Restructure Details and Memo to Staff
Amy Coleman, executive vice president of Microsoft, communicated the changes in a memo to staff on Monday. She stated: "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. Our business is changing because the world around it is changing."
Coleman clarified that the eliminated roles are not being replaced by artificial intelligence, but acknowledged that AI is transforming how work is accomplished. The cuts primarily affect Microsoft's Commercial and Xbox organisations.
Xbox Leadership's Statement
Asha Sharma, who recently assumed the role of chief of Xbox, described the worldwide cuts as the beginning of "the most significant restructure in Xbox history." In a statement on X, she explained: "After careful consideration, I've made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management."
Sharma acknowledged the challenges of a year-long restructuring, noting: "Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale."
Studio Spin-offs and Previous Cuts
As part of the restructuring, four Xbox game development studios are being spun off: Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Lab, according to The Sun. This follows previous significant job reductions at Microsoft: in 2024, Xbox cut 2,000 roles, and Microsoft eliminated 9,000 positions last year after increasing investment in AI.
