Microsoft Preparing New Round of Layoffs Hitting Sales, Consulting and Xbox

Microsoft is preparing to launch a fresh round of layoffs that could affect thousands of employees worldwide, according to a report by Business Insider. The company is reportedly planning to cut under 2.5% of its global workforce, with a formal announcement expected as early as next week. The reductions are set to primarily target roles within the tech giant’s sales and consulting departments, alongside further structural trims in its Xbox gaming division. Microsoft has declined to comment on the reports.

Strategic Pivot Toward AI

The pending job cuts highlight Microsoft's continued efforts to control operational expenses while aggressively expanding its investments in artificial intelligence (AI) infrastructure. As tech companies face growing pressure from Wall Street to prove the profitability of generative AI, many are aggressively redirecting capital away from traditional software and services into specialized hardware and AI development. Layoff Wave: Over 56,000 Tech Professionals in India Actively Seeking New Jobs as Talent Surplus Hits Strained Market.

The strategy follows similar restructurings across the broader technology landscape. Companies like Amazon and Meta have recently scaled back their workforces - eliminating roughly 16,000 and 10% of their roles, respectively—citing the need to reallocate personnel and funding toward core AI capabilities.

Continued Pressure on Gaming

The expected reductions in the Xbox division follow an ongoing review of Microsoft's gaming business. Earlier this year, newly appointed Xbox CEO Asha Sharma issued an internal memo indicating a necessary "reset" for the division, noting structural imbalances and a dip in annual revenues despite multi-billion-dollar investments over the past five years. Delhi Woman Anukriti Vidyarthi Fired After 5.5 Years at Wipro, Video Goes Viral.

The gaming segment has faced headwinds from rising hardware manufacturing expenses, which recently prompted global price increases for Xbox consoles. Industry analysts suggest the latest adjustments aim to better align the division’s budget and headcount with the parent company's overarching long-term strategy.

Context of Workforce Adjustments

While the reported 2.5% reduction will affect thousands of positions, it remains smaller in scope than Microsoft’s prior restructuring phases. In mid-2025, the company executed two successive rounds of layoffs, eliminating 6,000 roles in May followed by another 9,000 jobs in July, which totalized roughly 4% of its workforce at the time.

Earlier in 2026, Microsoft also introduced a voluntary retirement program in the United States, offering buyout options to long-tenured employees. The program helped naturally reduce headcount across domestic operations prior to the implementation of targeted layoffs. Some personnel impacted by the upcoming July cuts are expected to be evaluated for immediate internal relocation where alternative roles are available.

(The above story first appeared on LatestLY on Jul 02, 2026 08:36 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).