Microsoft Plans Fresh Layoffs; Up To 2.5% Workforce May Be Cut: Report

Microsoft is preparing another round of job cuts that could affect fewer than 2.5% of its global workforce, according to a Business Insider report. The layoffs could be announced as early as next week and are expected to impact thousands of employees across multiple business divisions.

According to the report, the latest workforce reduction will affect roles in sales, consulting and the Xbox gaming business as the technology giant continues to streamline operations while investing heavily in artificial intelligence infrastructure.

Microsoft had around 228,000 full-time employees as of June 30, 2025, according to its latest annual filing with the US Securities and Exchange Commission (SEC). A workforce reduction of less than 2.5% would still translate into several thousand job cuts.

AI Investments Drive Cost-cutting

The planned layoffs come as Microsoft and other major technology companies continue to rebalance spending priorities toward artificial intelligence.

Across the technology sector, companies have been trimming headcount while simultaneously committing billions of dollars to AI infrastructure, data centres and advanced computing capabilities.

Microsoft has been among the biggest spenders on AI, investing heavily in expanding its cloud infrastructure and integrating generative AI across its software and enterprise offerings.

The company had already announced one of its largest workforce reductions in recent years in July 2025, when it cut nearly 4% of its global workforce.

Xbox Business Faces Restructuring

The latest report also suggests Microsoft's Xbox gaming division could see significant job reductions.

Earlier this month, Bloomberg reported that Xbox was planning major layoffs alongside substantial cuts to marketing and other operating budgets after raising prices for its gaming consoles worldwide, citing a worsening global components crisis.

Separately, The Information reported that Microsoft has been evaluating strategic options for its gaming business, including a possible spinoff or restructuring of Xbox as a wholly owned subsidiary.

The latest layoffs are expected to coincide with those broader restructuring efforts.

Tech Sector Continues Workforce Reset

Microsoft's move reflects a broader trend across the technology industry, where companies continue to reduce employee numbers despite improving financial performance.

Earlier this year, Meta announced plans to cut around 10% of its workforce, while Amazon outlined plans to eliminate roughly 16,000 jobs globally as part of its ongoing cost-efficiency measures.

The latest round of layoffs underscores how major technology companies are continuing to reshape their workforces as they redirect resources toward artificial intelligence and other strategic growth areas while maintaining tighter control over operating expenses.