Redmond: Microsoft job cuts have reached 4,800 as the company moves forward with a major restructuring of its Xbox division.
Microsoft Corporation (Microsoft) has reduced its workforce by around 2.1 percent, with a significant portion of the layoffs affecting Xbox operations. More than 1,600 roles have been eliminated immediately within the gaming unit, with a further 1,600 positions expected to be cut over the coming year.
Amy Coleman, Executive Vice President at Microsoft, stated that, the changes are aimed at focusing on areas that deliver value to customers in a rapidly evolving industry. Coleman added that companies must adapt to industry shifts rather than resist them.
This is an important email I sent today to all employees at XBOX:
Team,
We are beginning the most significant restructure in XBOX history. After careful consideration, I've made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include…
— ASHA (@asha_shar) July 6, 2026
Within Xbox, the restructuring has been described as the most significant in its history. Asha Sharma, Chief Executive of Xbox, noted that, the changes are intended to support long-term growth. Sharma added that the restructuring is designed to strengthen the division’s future rather than reduce its scope.
As part of the overhaul, four game development studios have been separated from the division. These include Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab. The move forms part of a broader effort to reshape operations and streamline resources. The announcement has come at a challenging time for the gaming sector. Studios across the industry have faced sustained layoffs in recent years.
Microsoft has indicated that the job cuts are not being directly replaced by artificial intelligence. However, Coleman noted that AI is changing how work is carried out across the company. The restructuring follows earlier plans by Microsoft to reduce up to 9,000 jobs as part of a wider strategy linked to increased investment in AI. The latest measures reflect ongoing adjustments as the company aligns its operations with shifting market conditions and technological change.
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