Microsoft Announces Largest Layoffs in Over Two Years
Microsoft has confirmed a major workforce reduction, laying off around 9,000 employees, marking its largest layoff in more than two years. This sweeping round affects key divisions, including Xbox, sales, and other global teams, as the company pushes to streamline operations and refocus on core growth areas.
Layoff notices began circulating on Wednesday, with at least 830 roles cut in Redmond, Washington, where Microsoft is headquartered. The move follows earlier job cuts and highlights a continued shift in strategy under CEO Satya Nadella’s leadership.
Strategic Shake-Up Targets Legacy Divisions
The company emphasized that these layoffs are part of organizational changes aimed at increasing agility in a rapidly evolving tech landscape. According to internal communications, the focus is on flattening management structures, trimming legacy teams, and prioritizing AI, cloud, and infrastructure investments.
Xbox chief Phil Spencer addressed the gaming division directly, stating the changes would position the team “for enduring success” and allow focus on “strategic growth areas.” He also noted that Xbox will follow Microsoft’s broader plan to reduce management layers.
Layoffs Hit Gaming, Sales, and Engineering Roles
This marks Microsoft’s second mass layoff of the year, following a May cut of about 6,000 employees, nearly 3% of its global workforce. By comparison, the new round affects nearly 4% of Microsoft’s 228,000 full-time employees as reported in June 2024.
The layoffs impact various roles, including software engineers, product managers, and team leads across the Xbox division and other non-core operations. Many affected game developers and tech workers took to social media to confirm the news and search for new roles.
AI Ambitions Come With Trade-Offs
While Microsoft trims slower-growing areas, it continues to double down on AI and cloud infrastructure. These investments are costly. The company anticipates spending close to $80 billion in the current fiscal year to build out data centers, chips, and infrastructure that will fuel its AI-driven future.
Earlier this year, Microsoft CFO Amy Hood stated the company was committed to “increasing agility by reducing layers” and building high-performing teams. Those decisions now seem to be reshaping its workforce in significant ways.
There is also growing speculation that Microsoft’s own AI-powered development tools, which CEO Satya Nadella says already write “20 to 30% of code” in some projects, may be reducing the need for some engineering positions.
Focus Shifts to Cloud, AI, and Efficiency
According to Wedbush Securities analyst Dan Ives, Microsoft’s strategy reflects a clear shift: “They’re focusing more on AI, cloud, and next-gen Microsoft… trimming around Xbox and legacy business areas.” Ives also suggests the company may have overhired in recent years and is now realigning to meet Wall Street expectations for efficiency.
This shake-up comes on the heels of Microsoft’s massive acquisitions in gaming, including:
$75.4 billion acquisition of Activision Blizzard in 2023
$7.5 billion purchase of ZeniMax Media (Bethesda) prior to that
Despite these bold investments, many of the associated studios were impacted by this week’s layoffs, creating turbulence across the gaming division.
A Tense Moment for Microsoft Workers
For Microsoft employees—especially those in gaming, product, and sales roles—this latest wave adds to a year filled with uncertainty. While the company positions this restructuring as future-focused, the human toll remains high.
As Microsoft leans into AI, cloud computing, and infrastructure, its legacy divisions face a tougher path forward.
Stay tuned to Maple Wire for continued coverage on tech industry trends, workforce changes, and AI’s rising impact on global business.
