Microsoft is preparing for another round of job cuts that could affect thousands of employees across multiple divisions, including sales, consulting and its Xbox gaming business, according to Reuters citing Business Insider. The layoffs are expected to be announced as early as next week, though the timing may still change, and are estimated to impact less than 2.5% of Microsoft's 228,000-person workforce as of June 30. Some employees affected by the restructuring may be offered new roles immediately, with the Xbox gaming division expected to be among the hardest hit. The latest round is likely to be smaller than similar layoffs last year, when Microsoft cut 6,000 roles in May and an additional 9,000 employees in July, representing about 4% of the company's workforce. As per Reuters, the planned workforce reduction would still result in thousands of employees losing their jobs, with multiple business units expected to be included in the latest round of layoffs.
Microsoft's Xbox gaming business is also expected to be part of the latest layoffs, according to the Reuters report. Earlier this month, it was reported that Xbox was preparing for significant job cuts, along with reductions in marketing and other budgets. The report came after Microsoft raised prices on Xbox gaming consoles in several markets, citing rising costs tied to global component shortages. It was also reported in June that Microsoft was evaluating different options for its gaming business, including restructuring Xbox as a wholly owned subsidiary or exploring a potential spinoff. Microsoft has not publicly confirmed these plans, but the gaming division's inclusion in the current layoffs suggests continued strategic reassessment of the business.
The tech industry's layoff wave shows no signs of abating in 2026, with more than 1 lakh technology jobs already cut this year, according to reports from Livemint. This represents a continuation of the workforce reduction trend that has persisted over the past two years. Companies such as Microsoft, Intel, Cisco, PayPal, and Cloudflare are reducing their workforce while simultaneously investing heavily in artificial intelligence, automation, and data centre expansion. The cuts are being driven by AI and automation's growing influence on operations, with a large number of announcements directly attributing job cuts to AI's expanding role in areas such as coding, customer support, content creation, quality assurance, data entry, and mid-level management.
According to a report by Trueup, 423 layoffs at tech companies have impacted 158,249 people in 2026, translating to 879 people per day. This compares to 783 layoffs affecting 245,953 people in 2025, which averaged 674 people per day. Companies are shifting investments toward AI infrastructure, model development, and emerging roles while scaling back staffing in other functions. The data shows the ongoing nature of workforce reductions in the technology sector, with companies maintaining their focus on AI-driven efficiency improvements despite the human impact.
The layoffs extend beyond Microsoft to include several other prominent firms, as reported by Livemint. ZoomInfo is cutting 300 jobs, DeepL is eliminating 250 positions, Arctic Wolf is reducing 250 roles, Adda247 is cutting 200 jobs, MRI Software is cutting 200 positions, Staffbase is reducing 176 roles, Upwork is cutting 151 jobs, Pocket FM is eliminating 100 positions, and Truecaller is reducing 70 roles. The job cut plan highlights Microsoft's efforts to rein in costs as it ramps up spending on AI, according to Business Insider. The company is facing pressure from Wall Street over concerns that AI could replace software services, including Microsoft offerings, with the stock tanking about 17% in the last month. Microsoft announced a voluntary retirement program earlier this year, offering buyouts to employees level 67 and below in the US who had 70 or more years of age and service.
