REDMOND, Washington — Microsoft is eliminating about 4,800 jobs worldwide, including a sweeping restructuring of its Xbox gaming business that will result in roughly 3,200 positions being cut over the company's 2027 fiscal year, as the technology giant seeks to streamline operations and improve returns following years of heavy investment in gaming.
The reductions amount to about 2.1% of Microsoft's global workforce and represent one of the company's largest rounds of layoffs in recent years. Around 1,600 positions in the Xbox division are being eliminated immediately, with additional reductions scheduled over the coming months as part of a broader reorganization, the company said.
Xbox CEO Asha Sharma described the move as the most significant restructuring in the gaming division's history. In a message to employees released by Microsoft, Sharma said the company would also transfer four game studios to new management while another studio remains under review.
"Our business today is not healthy," Sharma said, adding that Xbox's operating margins lag those of comparable platform and publishing businesses. She said the restructuring is intended to simplify the organization, reduce management layers and concentrate resources on areas where the company believes it can compete more effectively.
Microsoft Chief People Officer Amy Coleman told employees the layoffs reflect broader changes across the technology industry rather than the replacement of workers with artificial intelligence.
"Our business is changing because the world around it is changing," Coleman said in a company communication. She said Microsoft is focusing its people, investments and resources on priorities that it believes will position the company for long-term growth, while acknowledging that the job reductions are difficult for affected employees.
The overhaul follows years of aggressive expansion in Microsoft's gaming business, including its multibillion-dollar acquisition of Activision Blizzard. Despite those investments, Xbox has continued to trail Sony's PlayStation and Nintendo in the console market, prompting Microsoft to increasingly distribute first-party games across multiple platforms instead of relying primarily on console exclusives.
The restructuring also comes as Microsoft and other large technology companies continue investing heavily in artificial intelligence infrastructure while seeking to control costs elsewhere in their businesses. The company has said the latest workforce reductions are part of a broader transformation designed to align staffing and organizational structure with evolving business priorities.
Microsoft said it will provide affected employees with severance benefits, career transition assistance and opportunities to apply for other roles within the company where available. The remaining Xbox restructuring is expected to continue through fiscal 2027.
