In a move that has sent ripples through the tech world, Microsoft, the American tech giant known for Windows and Xbox, is gearing up for another round of job cuts. This will be the company’s fourth major layoff in just 18 months, with the focus this time on its Xbox gaming division and global sales teams. The layoffs, expected to be announced in early July 2025, come as Microsoft wraps up its financial year on June 30. While the exact number of job losses is still unclear, reports suggest the cuts will be substantial, affecting thousands of employees.
What’s Happening?
Microsoft is planning a significant restructuring of its workforce, particularly targeting its Xbox division, which handles gaming consoles, game development studios, and services like Xbox Game Pass. The company’s global sales teams, which include around 45,000 employees as of June 2024, are also in the line of fire. This follows a pattern of layoffs at Microsoft, with previous rounds in 2023 and 2024 already trimming thousands of jobs. In May 2025 alone, Microsoft let go of about 6,000 employees, mostly from engineering and product teams. Now, the spotlight is on Xbox and sales, with managers bracing for what they describe as “considerable” reductions.
The Xbox division has been under scrutiny since Microsoft’s massive $69 billion acquisition of Activision Blizzard in 2023, a deal that brought popular games like Call of Duty and Diablo under its wing. However, the gaming unit has struggled to meet profit expectations, leading to multiple rounds of cost-cutting. In January 2024, 1,900 jobs were cut from Xbox and Activision Blizzard teams, followed by another 650 in September 2024. Some well-known studios, like Tango Gameworks (Hi-Fi Rush) and Arkane Austin (Redfall), were even shut down, though Tango was later saved by another company. This fourth wave of layoffs signals that Microsoft is still trying to streamline its gaming business while juggling other priorities.
Why Are These Layoffs Happening?
The layoffs are part of a broader effort by Microsoft to reorganise its operations and focus on high-growth areas like artificial intelligence (AI) and cloud computing. The company is pouring a whopping $80 billion into building data centres and developing AI-powered tools this financial year. This massive investment is putting pressure on other parts of the business to cut costs and improve efficiency. Microsoft’s CEO, Satya Nadella, has made it clear that AI is a top priority, with 30% of the company’s internal code now generated by AI tools. To fund these ambitious plans, Microsoft is trimming jobs in areas like gaming and sales, where it sees less immediate growth.
The Xbox division, once a star performer, is now facing tough times. Despite the success of Game Pass and blockbuster titles from Activision Blizzard, Xbox console sales have dropped by around 30% in recent years. Microsoft has also raised prices for its Xbox Series X and S consoles, making them more expensive than competitors like Sony’s PlayStation 5. This has added to the pressure to make the gaming division leaner and more profitable. On the sales side, Microsoft is outsourcing some tasks, like software sales for small and medium-sized businesses, to third-party firms to save money.
The tech industry as a whole is also going through a rough patch. Since the start of 2025, over 63,000 tech workers have lost their jobs across companies like Google, Amazon, and Intel, according to Layoffs.fyi. Economic challenges, slow revenue growth, and the rise of AI are forcing companies to rethink their workforce and focus on automation and high-tech areas. Microsoft’s layoffs are part of this larger trend, as it tries to stay competitive in a fast-changing market.
What Does This Mean for Employees?
For Microsoft’s employees, especially those in the Xbox division and sales teams, the news is unsettling. With about 228,000 employees worldwide as of June 2024, the company is a major employer, and these cuts could affect thousands of livelihoods. The layoffs are not based on individual performance but are part of a strategic realignment, as Nadella has emphasized. Still, this offers little comfort to workers who may lose their jobs just before the fiscal year ends.
The Xbox division, in particular, has been hit hard over the past 18 months. The closure of studios and repeated layoffs have created uncertainty for game developers, designers, and support staff. For sales teams, the shift to outsourcing could mean fewer opportunities for in-house roles, especially for those handling small and mid-sized business accounts. Microsoft has not yet confirmed how it will support affected employees, but past layoffs have included severance packages and career transition assistance.
What’s Next for Microsoft?
As Microsoft prepares for these layoffs, the company is walking a tightrope. On one hand, it’s investing heavily in AI and cloud infrastructure to stay ahead in the tech race. On the other, it’s cutting jobs in divisions like Xbox and sales to balance the books. This restructuring could reshape Microsoft’s gaming strategy, with a stronger focus on digital services like Game Pass and cloud gaming rather than hardware sales. However, the repeated layoffs risk damaging morale and raising questions about the long-term future of Xbox as a key part of Microsoft’s business.
For Indian employees and tech workers watching this unfold, the news serves as a reminder of the challenges facing the global tech industry. India, a major hub for Microsoft’s operations, could also feel the impact if the layoffs extend to global teams. While Microsoft hasn’t confirmed specific details about affected regions, the scale of the cuts suggests that no team is entirely safe.
The Bigger Picture
Microsoft’s fourth layoff wave is more than just a company cutting costs—it’s a sign of the times. As tech giants shift their focus to AI and automation, workers in traditional roles like sales and even gaming are feeling the squeeze. For Xbox fans and employees alike, the question is whether Microsoft can turn its gaming division around while chasing its AI ambitions. For now, the company is making tough choices, and thousands of workers are bracing for the impact.
As the tech world waits for Microsoft’s official announcement, expected early next week, all eyes will be on how these layoffs shape the company’s future—and what it means for the people who help make Xbox and Microsoft what they are today.
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