Microsoft is laying off 4,800 employees, which is 2.1% of its workforce, as part of a cost-cutting initiative amid the evolving landscape of artificial intelligence. The Xbox division will see a significant reduction, losing about 20% of its staff, with 1,600 positions eliminated immediately and an additional 1,600 planned through fiscal year 2027.
This restructuring comes as Microsoft faces challenges in various sectors, including a decline in revenue from its Xbox gaming unit and other hardware products, despite growth in cloud services and LinkedIn. The company has also announced the spin-off of four gaming studios, including Compulsion Games and Double Fine Productions, which will return to independent status.
Microsoft has been underperforming in the tech sector, with its stock down 19% year-to-date, as investors express concerns over its AI strategy and the potential impact of generative AI on enterprise software. The layoffs follow previous rounds of job cuts and a voluntary retirement program aimed at reducing workforce size.
Microsoft's chief people officer, Amy Coleman, emphasized the need for continuous adaptation and skill development in response to the changing nature of work driven by AI