Microsoft lays off 4,800 employees, citing AI-driven industry shifts

Microsoft announced it is laying off 4,800 employees, approximately 2.1% of its workforce, as it begins its new financial year. The company stated that most of the affected roles are within its commercial sales organization or the Xbox division.

In an internal memo, Amy Coleman, Microsoft’s chief people officer, attributed the job losses to a changing technology industry and the need to adjust resources in response to how AI is impacting companies. Coleman emphasized that the eliminated roles are not being replaced by AI, while acknowledging that AI is altering how work is performed.

The layoffs will immediately impact around 1,600 employees in Xbox, with plans to eliminate a total of about 20% of Xbox jobs by the end of the financial year. Microsoft also disclosed it is selling four Xbox studios and considering the sale of another as part of a broader “reset” of its Xbox business.

Coleman noted that the company has redeployed more than 4,000 employees into new roles over the past year, including 500 this month, and highlighted a voluntary retirement program that allowed U.S. employees with combined age and service totals of 70 or more to retire with enhanced severance and healthcare benefits. Over 30% of eligible employees participated in the program.