Microsoft cuts 4,800 jobs, about 2% worldwide, revamps retailers and unveils major Xbox overhaul – GeekWire
Microsoft is cutting 4,800 jobs, a little more than 2% of its global workforce, citing the need to revamp its sales and consulting sector to keep up with the rapidly changing technology industry, while restructuring its Xbox business with a focus on long-term growth and revenue from games.
The cuts include about 600 jobs in Washington state, which is home to Microsoft’s Redmond headquarters. That’s down from 3,200 job cuts in the area last year. Combined with ongoing hiring, Microsoft’s workforce in the state is expected to remain stable at approximately 52,000 people.
About 1,600 of the 4,800 job cuts announced Monday are in the Xbox division. More Xbox layoffs in the coming months are expected to bring job losses in the games division to about 3,200, or about 20% of Xbox’s global workforce, this fiscal year.
Microsoft is also opening Xbox four game studios to work independently.
In an internal memo, Xbox CEO Asha Sharma called it the biggest restructuring in Xbox history, saying the division was “operating at 3-10x lower margins than the same platform and publishing businesses” and that studios had been losing 64 cents on every dollar invested.
Overall, top executives sought to set Microsoft apart from other tech giants, saying the cuts were offset by the reassignment of more than 4,000 workers to new roles in the past year and a voluntary retirement program that allows thousands more to leave at will.
By comparison, the company last year cut more than 15,000 jobs worldwide in two rounds of layoffs in the spring and summer of 2025 – the biggest reduction in more than a decade.
The latest cuts come amid record spending on the company’s AI infrastructure, pressure from Wall Street to contain operating costs, and a 30% stock slide that has wiped nearly $1.2 billion off Microsoft’s market value over the past nine months.
“Microsoft can only be a strong employer if it has a successful business,” said Brad Smith, president and vice chairman, in an interview with GeekWire. “We have to adapt to change.”
Before the latest cutbacks, the company’s workforce was around 220,000 people. Company-wide, Microsoft expects the number of people worldwide to decline year-over-year, CFO Amy Hood said on an earnings call in April.
Amy Coleman, Microsoft’s chief people officer, said in a memo to employees Monday morning that the roles the company is eliminating today are not being replaced by AI.
At the same time, he admitted, “AI is changing the way work is done.” He added, “Some of the tasks we do every day are now self-sufficient, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves.”
However, the line from Coleman’s memo that is likely to get the most attention internally is this: “We are still early in this journey, and there will be more changes; other parts of our business will need to make similar changes.”
In the interview, Coleman stopped short of layoffs across the company. Instead, he described a major change in the way Microsoft treats its employees. That includes retraining engineers for customer- and AI-facing positions, and exploring how to make voluntary exit programs a regular part of the company’s operations — not just a one-time offering, but one that employees can opt into annually or on an ongoing basis.
Coleman confirmed that about 30% of the 8,750 eligible US workers accepted Microsoft’s retirement plan for the first time in recent weeks, in line with the company’s expectations, which reduced the size of the workforce reduction announced on Monday.
The cuts and changes in the company’s sales and consulting teams build on the launch of Microsoft Frontier Company last week, a $2.5 billion plan to embed 6,000 engineers inside customers to install AI. This change reduces traditional sales and consulting roles and results in more technical positions working directly with customers.
“We realize that we need more engineering in the customer space,” he said.
Smith said software development is undergoing the biggest change in the more than 50 years since Microsoft was founded. The widespread use of AI is making codes cheaper and faster to produce, but he said that’s also creating a need for new types of roles and work.
“Some things like coding require less time for software developers,” he said. “At the same time, there are new areas that are growing, be it product management or software design, or perhaps most importantly, working directly with customers.”
