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Microsoft has announced its plans to lay off approximately 4,800 employees, a figure representing 2.1 percent of the tech giant’s global workforce, with its gaming division XBOX to see the majority of the job losses.
In a blogpost, Executive Vice President (EVP) Amy Coleman said that the rapid transformation of the world meant that Microsoft had to change too.
“The way technology is built, deployed, and used is transforming faster than at any point in my time here,” Coleman said, adding that “our customers’ needs are shifting, the business models that serve them are shifting, and that means the work itself – what we do, where we focus, and how we’re organized – has to transform too”.
The EVP and Chief People Officer (CPO) said that the roles eliminated in the job cuts “are not being replaced by AI”. However, Coleman also said that artificial intelligence is changing “how work gets done” and that Microsoft had to adapt to that reality in order to best serve its customers.
Microsoft’s gaming division, XBOX, will see the majority of the layoffs, with XBOX CEO Asha Sharma their team would be reduced by 3,200 employees throughout Financial Year (FY) 2027.
In an email sent yesterday to XBOX staff, Sharma said that it marks the “most significant restructure” in the company’s history.
“After careful consideration, I’ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management,” Sharma wrote.
Sharma, who became CEO in February this year, said that “our business today is not healthy”.
In light of poorer returns on investment than expected and “the most severe hardware crisis in its history”, XBOX requires a “reset”, the company head said.
A number of XBOX’s development studios are to be split off from the company as part of the changes, including Compulsion Games, Double Fine Productions, Ninja Theory and Undead Labs.
“These changes are about a bigger future for XBOX, not a smaller one,” Sharma said, adding that the next decade of gaming “will be larger, more global, and more creative than anything we’ve seen before”.
“History is full of companies that mistake longevity for inevitability. We will not be one of them,” she said, stating an ambitious goal to see XBOX “be one of the few companies that entertains more than a billion people each day”.
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