Microsoft Plans Layoffs of Thousands Next Week, Cutting Sales and Xbox Divisions to Fund AI

According to Business Insider, Microsoft will launch layoffs affecting thousands of employees next week, targeting sales, consulting, and Xbox divisions as the company prioritizes AI investments and cost control. The restructuring is expected to impact fewer than 2.5% of Microsoft's roughly 220,000 global workforce, or fewer than 5,500 employees, based on company guidance to Reuters.

The cuts reflect Microsoft's broader strategy to reallocate resources toward AI infrastructure, including Azure cloud services and Copilot AI products, following previous hiring freezes announced in March targeting Azure and North America sales teams. Xbox division, under new leadership, is simultaneously planning major restructuring in July alongside marketing budget reductions, as the company evaluates studio closures and potential asset sales to improve operational efficiency.