In a shocking development, Microsoft is reportedly preparing a new round of layoffs that is likely to affect less than 2.5% of its workforce worldwide.
As per Business Insider, the reported job cuts are likely to be announced as early as next week, impacting thousands of employees across several divisions, such as consulting, sales, and the Xbox gaming business.
The significant move is seemingly a part of the company’s broader strategy, as major technology firms continue to restructure operations to minimise costs while heavily investing in the cutting-edge artificial intelligence (AI), cloud computing, and next-generation technologies.
Though the American tech giant has yet to officially confirm the report.
Thousands of employees may lose their job
As per Business Insider, the layoffs will span several business units, with the sales and consulting teams expected to be among the hardest hit.
Some Microsoft's Xbox gaming divisions are also at the edge of losing their job as the company continues reviewing its gaming strategy.
Microsoft employed nearly 228,000 full-time employees all across the globe as of June 30, 2025, as per its latest annual filing with the US Securities and Exchange Commission (SEC).
If the reported cuts remain below 2.5% of the workforces, the layoffs could impact less than 5,700 employees.
While the exact number of affected employees remain underwrap, the move would represent Microsoft’s latest effort to streamline operations amid changing business priorities.
AI investments continue to transform the company
The reported layoffs come as Microsoft raises spending on AI infrastructure.
The company has invested heavily in expanding AI-powered products, including Microsoft Copilot, Azure AI services, and enterprise AI solutions. It is also continuing to build data centers worldwide to support the growing demand for AI computing.
These massive investments have prompted Microsoft and other technology firms to review operating costs, leading to workforce reductions in areas considered less critical to their long-term AI strategy.
Industry analysts say many technology companies are shifting resources away from traditional business functions toward AI research, software development, and cloud infrastructure.
Xbox Business faces extra changes
The reported job cuts also coincide with wider updates within Microsoft's gaming division.
Earlier this month, Bloomberg reported that Xbox was also planning to reduce jobs in marketing budgets and extra layoffs after recent price raises for Xbox consoles, which the company attributed to rising global component costs.
Separately, a report from The Information suggested that Microsoft has been exploring several options to restructure its Xbox business.
Although Microsoft has yet to officially confirm the report, they suggest the company is reassessing its gaming operations with mounting competition across the industry.
Microsoft's previous round of layoffs
Previously, Microsoft has also done significant workforce reductions in recent years, especially after the rise of AI.
In July 2025, the American tech giant unraveled some plans to minimize nearly 4% of its employees, marking the biggest rounds of layoffs in years.
The layoffs have affected several other teams, including engineering staff, and more.
What’s next?
It is important to note that Microsoft has yet to officially announce the layoffs, the reported move underscores the ongoing transformation taking place across the technology industry.
As companies are currently involved in an intensified conflict to expand their AI-powered capabilities, workforce restructuring has become a rising common strategy to fund long-term investments.
Following its confirmation, the latest layoffs would highlight the company’s commitment to focusing resources on AI and cloud technologies while adapting its business to a fledgling realm.
