Microsoft layoffs: Company cuts 4800 jobs; HR head Amy Coleman tells employees the reason why: Our business is changing because…
Microsoft has laid off around 4,800 employees, roughly 2.1% of its global workforce, as the company kicked off its new fiscal year on Monday. The cuts land mostly in Microsoft’s commercial sales business and its Xbox gaming division, and they come just weeks after the company’s stock logged its worst month since the dot-com crash.Chief people officer Amy Coleman broke the news in a memo to staff, framing the layoffs as part of a broader shift in how Microsoft operates rather than a simple cost-cutting exercise. “Today we are eliminating around 4,800 roles, about 2.1% of our global workforce, as we focus our people, investments, and energy on the priorities that will keep Microsoft positioned to deliver for customers in a fast-changing industry,” she wrote.
Why Microsoft is laying off employees right as its fiscal year starts
This isn’t new practice for Microsoft. The company typically cuts jobs around July 1, the start of its fiscal year, and last year’s reduction was far steeper: 6,000 roles gone in May, followed by another 9,000, close to 4% of the workforce, in July. Microsoft entered this round of cuts with more than 220,000 employees on the books.The timing lines up with growing investor unease. Microsoft’s stock fell 19% in June alone, its steepest monthly slide since the dot-com years, as markets grow jittery about whether heavy AI spending will actually pay off. Coleman was careful to draw a line between AI and the job cuts, though. “I also want to be direct that the roles eliminated today are not being replaced by AI,” she said, while acknowledging AI is reshaping how work gets done across the company.Microsoft had already tried to soften the blow earlier this year through a voluntary retirement scheme aimed at US employees at level 67 and below whose age and years of service added up to 70 or more. About a third of the nearly 9,000 eligible employees took the buyout, which is roughly what the company expected, and it meant Microsoft could cut a smaller share of its workforce than it did last year.
Xbox bears the brunt as gaming unit begins its own reset
Xbox is where the pain is concentrated. Nearly 1,600 of Monday’s job cuts hit the gaming division, and new Xbox CEO Asha Sharma told staff in a separate memo that the unit plans to shed another 3,200 employees over the course of the fiscal year, adding up to a 20% workforce reduction. “Our business today is not healthy,” Sharma wrote, pointing to margins running 3 to 10 times lower than comparable platform and publishing businesses.As part of the shake-up, four Xbox studios, Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs, are being spun off to new ownership, while Arkane’s French studio begins the required consultation process with its Works Council over its future. Coleman’s memo also touched on this, noting Microsoft will transition four of its gaming studios to operate independently under new management, with the goal of preserving both their intellectual property and ongoing projects.Sharma is also flattening Xbox’s management structure, cutting layers down to a maximum of five, and in some cases three, and handing Helen Chiang a newly created chief operating officer role with end-to-end control over content, hardware, platform, and services.Coleman signalled this won’t be the last round of adjustments either. “We are still early on this journey, and there will be more changes ahead; other parts of our business will need to make similar changes,” she wrote, adding that employees can hold leadership accountable to that promise each time it happens.
