Microsoft announced plans to lay off around 4,800 employees, or 2.1% of its global workforce, on Monday, confirming Business Insider’s earlier report.
The cuts mostly impact the sales and Xbox gaming organizations, Microsoft HR chief Amy Coleman wrote in an email to employees.
Microsoft’s Xbox division also plans to cut 20% of its workforce this fiscal year.
Xbox will account for 1,600 of Monday’s cuts.
Microsoft is cutting costs as it spends heavily in AI infrastructure, while facing growing investor concerns that AI could upend traditional software.
Those worries helped send Microsoft’s stock down 19% in June, its worst monthly performance since the dot-com era.
Microsoft typically cuts jobs around the start of its new fiscal year on July 1.
Last year, the company eliminated 6,000 roles in May and an additional 9,000 employees, or about 4% of the company’s workforce, in July.
Microsoft had more than 220,000 employees prior to the cuts.
As part of cost-cutting, Microsoft also earlier this year launched a voluntary retirement program offering buyouts to some employees.
About one-third of nearly 9,000 eligible employees took the buyout, in line with expectations, according to a person familiar with the program.
That allowed Microsoft to cut a lower percentage of its workforce compared to last year, this person added.
Microsoft’s latest layoffs reflect a broader balancing act playing out across Big Tech.
Even as tech companies pour record amounts of money into AI infrastructure, they are looking for ways to offset those costs by trimming their workforce and operating more efficiently.
In May, Meta laid off around 8,000 employees, accounting for about 10% of the company’s total workforce.
Amazon, Coinbase, Google, and Block have also laid off employees in recent months.
Read the memo Coleman sent to employees: “When I stepped into this role, I promised to communicate more openly with you and share the “why” behind our decisions.
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.
The people whose jobs are impacted today are our colleagues and friends.
They have made meaningful contributions to Microsoft, and we are deeply grateful for everything they have done.
Decisions like these are never easy, and you have my commitment that we are constantly looking for ways to reduce the need for job eliminations.
Whenever possible, our priority is to place people into new roles aligned to the company’s highest priorities and greatest areas of opportunity.
Over the past year, we have redeployed more than 4,000 employees into new roles, including another 500 this month.
We will also transition four of our gaming studios to operate independently under new management, with the goal of preserving both their intellectual property and ongoing projects.
In addition, more than 30% of eligible employees chose to participate in our recent voluntary retirement program, and we will continue exploring similar approaches in the future.
While this doesn’t change the difficulty of today’s news, we will continue to do everything we can to create opportunities for our people, reduce the need for job eliminations where possible, and responsibly support those affected with care and respect.
The “why” is this: our business is changing because the world around it is changing.
The way technology is built, deployed, and used is transforming faster than at any point in my time here.
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.
Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it.
That means we will need to adjust resources and roles and shift how we operate so we can have the greatest impact for our customers.
I also want to be direct that the roles eliminated today are not being replaced by AI.
At the same time, what is true is that AI is changing how work gets done.
Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves.
Our customers are navigating this same shift, and they’re counting on us to help them through it.
We can’t do that well unless we’re doing it ourselves.
This comes down to two commitments: making the decisions needed to drive differentiated customer value, and supporting the people affected by them.
First, we will make the hard changes required to build differentiated products and services that deliver differentiated customer value.
We are aligning our investment, people, and energy to our business priorities.
Today’s changes mostly impact our Commercial and XBOX organizations.
In our Microsoft Commercial Business, they build on last week’s Frontier Company announcement, reshaping how we work and embedding our engineering experts alongside customers so we can help them accelerate their technology deployments.
In XBOX, we are restructuring to position the business for long-term success.
Engineering teams across the company will also continue to evolve their structure and priorities to meet customer needs and innovate for the future.
Second, we will do this thoughtfully.
As mentioned above, we are working on alternative solutions to job eliminations and beyond this, we will continue to invest in equipping employees with new skills, including in AI.
For those who are impacted, we provide financial support and resources to help them take their next step.
I know many of you want to help those who are leaving but aren’t sure how.
Reach out and check in on your colleagues.
Use your network to bring people together, share what makes them exceptional, and help create connections to opportunities that might not happen otherwise.
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.
Each time, you can hold us to the two commitments.
During my time at Microsoft, I’ve seen this company reinvent itself again and again.
What makes that possible has always been our people — their resilience, creativity, and willingness to keep learning.
Thank you for everything you bring to Microsoft.
Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242.
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