Microsoft may cut 4% of its employees next week.

Microsoft Plans New Layoffs Impacting Workforce

Microsoft is reportedly set to let go of up to 2.5% of its staff, potentially affecting around 5,000 employees, as early as next week. The reductions might touch various sectors, including sales, consulting, and even their Xbox gaming division, according to sources.

This move is part of broader restructuring efforts within the tech industry, as companies strive to trim expenses and focus more on artificial intelligence (AI). In the previous summer, Microsoft had already laid off about 9,000 workers, which was around 4% of its workforce at the time.

As of June 30, 2025, Microsoft’s latest filing with the Securities and Exchange Commission (SEC) indicated that the firm had roughly 228,000 full-time employees worldwide. So, a 2.5% reduction would equate to about 5,700 job cuts.

Some of those impacted by these layoffs may be offered new roles within Microsoft almost immediately, as per knowledgeable insiders.

Recently, there has been concern among investors as Microsoft’s stock saw a drop of about 19% last month—its worst month since the dot-com crash. Analysts are increasingly vocal about the possibility that AI developments might eventually render certain software services, including Microsoft’s offerings, less relevant.

Meanwhile, within the Xbox division, CEO Asha Sharma sent a memo to staff urging a “reset” after a series of poor business performances. Reports suggest that significant layoffs are on the horizon for this sector as well, with marketing budgets likely to be notably reduced. It’s hinted that there may even be studio closures or project cancellations.

Interestingly, Xbox has also raised the prices of its consoles by $100 to $150 globally, citing a surge in demand for memory and storage due to the AI boom.

It’s noted that Microsoft’s layoffs have been rather substantial in recent years, with approximately 15,000 positions eliminated in multiple rounds last year, including notable numbers in May and July.