Microsoft Announces Next Round of Job Cuts: Impacting Xbox, Sales, and Consulting Teams

Microsoft is gearing up to reduce its workforce next week as part of cost-cutting measures while simultaneously investing substantial amounts in AI infrastructure.

Reports from Business Insider indicate that the job cuts will impact less than 2.5% of Microsoft’s global workforce of approximately 220,000 employees. The layoffs are expected to affect various departments including Xbox, sales, and consulting.

Confirmation of the impending layoffs was obtained from a reliable source familiar with Microsoft’s plans. The company has chosen not to comment on the reports.

These upcoming layoffs align with Microsoft’s historical pattern of restructuring operations around the end of its fiscal year on June 30. The reduction in workforce will coincide with the start of the new fiscal year.

Compared to the previous year, the scale of layoffs is expected to be smaller. In the previous year, Microsoft conducted two rounds of layoffs, with over 15,000 employees affected. This year, Microsoft introduced its first voluntary retirement program, with approximately one-third of eligible U.S. employees opting for the buyout.

Microsoft’s investment in AI and cloud infrastructure has exceeded $100 billion in the fiscal year that just concluded, a significant increase from the previous year. The majority of these funds are allocated to AI-powered chips.

Despite these investments, Microsoft’s stock closed lower on Tuesday, reflecting a 19% decline over the past month and nearing a 52-week low. There are concerns among investors regarding the profitability of Microsoft’s substantial AI spending.

These layoffs occur within a broader trend of restructuring across the tech industry, which has witnessed a higher number of job cuts compared to other sectors this year. U.S. tech companies alone have announced over 123,000 job cuts in 2026, showing a 66% increase from the previous year.

Across all industries, AI has emerged as a primary reason for job cuts, with May marking the third consecutive month where AI-related layoffs have been the highest. The total number of job cuts attributed to AI in 2026 has already surpassed the figures for the entire year of 2025.