Microsoft is reportedly preparing another round of layoffs, with sales, consulting and Xbox teams expected to bear the brunt as the company ramps up AI investments.
Microsoft is preparing another round of layoffs that could affect thousands of employees across several business units, including sales, consulting and its Xbox gaming division, according to a report by Business Insider, which cited people familiar with the matter.
The workforce reduction could be announced as early as next week, although the timing remains subject to change. The report said the layoffs are expected to affect less than 2.5% of Microsoft’s global workforce, making the cuts smaller than those carried out last year.
Some employees impacted by the restructuring may be offered alternative roles within the company immediately, according to one source cited in the report.
The planned job reductions come as Microsoft continues to balance cost controls with massive investments in artificial intelligence infrastructure. The company has committed billions of dollars to expanding AI capabilities while navigating investor concerns over how rapidly evolving AI technologies could reshape its traditional software business.
According to Microsoft’s latest regulatory filing, the company employed approximately 228,000 people as of June 30, 2025.
The Xbox business is expected to be among the divisions most affected. Earlier this month, Bloomberg reported that Microsoft’s gaming unit was preparing significant job cuts alongside reductions in marketing and other operational budgets. Meanwhile, The Information reported that Microsoft has been exploring strategic options for Xbox, including the possibility of restructuring the business or operating it as a wholly owned subsidiary.
Ahead of the planned layoffs, Microsoft also introduced a voluntary separation program for eligible U.S. employees below senior leadership. Around one-third of eligible workers reportedly accepted the offer, reducing the number of compulsory layoffs required. Employees in commission-based sales roles were not included in the program, according to Business Insider.
Microsoft has frequently announced organizational restructuring at the beginning of its fiscal year, which starts on July 1. In 2025, the company cut about 6,000 jobs in May, followed by another 9,000 positions in July, representing roughly 4% of its workforce.
