Microsoft trims roughly 4,800 jobs, with Xbox and commercial sales facing the steepest cuts

Microsoft is laying off about 4,800 employees, representing roughly 2.1% of its global workforce, in a round of cuts concentrated in Xbox and its commercial sales organization, according to a report citing an internal memo shared with staff. The reductions, announced on Monday, arrive amid a broader wave of job cuts across major technology firms as companies restructure for the next phase of artificial intelligence adoption.

The memo quoted by TechCrunch was attributed to Amy Coleman, Microsoft’s executive vice president and chief people officer. Coleman told employees that technology is being “built, deployed, and used” in ways that are transforming faster than at any point in her career, and that changes in customer needs and business models require a shift in “work itself,” including where the company focuses and how it is organized. She emphasized that Microsoft’s response is to adjust resources and roles to have the greatest impact for customers.

Coleman also addressed concerns that the cuts are tied to artificial intelligence replacing people. The report says she wrote that the eliminated roles being cut “are not being replaced by AI,” while adding that AI is changing how work gets done because some tasks can now be automated. Her message, as described in the report, urged employees to keep learning and building new skills as work evolves.

Coverage of the announcement suggests the cuts are part of a broader cost and workforce plan inside Microsoft’s gaming and enterprise businesses. CNBC reported that Microsoft’s Xbox division is cutting about one-fifth of its staff, with a spokesperson describing changes that extend through fiscal year 2027. CNBC also said Xbox is planning to spin off four gaming studios, though the reporting did not provide details in the excerpted material about which studios would be involved or the timing beyond the near-term restructuring steps.

According to CNBC, Microsoft’s layoffs of 4,800 were carried out after the company conducted a voluntary retirement program. In parallel, the Xbox unit’s internal email cited by CNBC indicated layoffs across the division: it described 1,600 roles eliminated immediately on Monday, with additional reductions to follow later as part of the division’s longer restructuring timeline.

The cuts also come as investors and employees increasingly connect headcount reductions to the economic pressure of automation and the deployment of AI tools in enterprise software. While Microsoft’s leadership, as described in the memo, sought to distinguish the layoffs from AI substitution of the same jobs, the restructuring nonetheless highlights how companies are rebalancing staff around new product and delivery models.

Still, several specifics remain unclear from the publicly available reporting summarized here. The excerpts do not break down how many roles are cut in commercial sales versus other business functions, nor do they provide the number of employees affected by location, team, or job level. The information also does not describe whether the company intends to backfill any eliminated positions later through hiring in different roles, beyond the message that Microsoft’s work will be “adjust[ed]” as work changes.

For employees and customers, the near-term questions will be how Microsoft’s remaining teams absorb the transferred workloads, and whether the company’s evolving Xbox and commercial sales operating models lead to changes in timelines, delivery, or service commitments. Over the next several weeks, more internal and external clarity will likely emerge around which positions are impacted, how voluntary departures were structured, and what, if anything, Microsoft will say about productivity plans tied to automation and AI deployment.