Microsoft is reportedly gearing up for another round of job cuts, this time focusing on its Xbox division, as part of a broader restructuring effort before wrapping up its financial year.
According to Bloomberg, this would mark the fourth major layoff at the tech giant in the last 18 months and comes amid increasing pressure to prioritise profitability, particularly following its $69 billion acquisition of Activision Blizzard in 2023, said a report by India Today.
Sources familiar with the development said the upcoming layoffs will affect multiple teams within the Xbox group, though the exact number of job cuts is not yet clear. The move is expected to be significant and may also extend to Microsoft’s global sales operations.
The layoffs are likely to be announced early next week, coinciding with the end of the fiscal year on June 30, a time when Microsoft typically implements major internal changes and team reorganisations.
Microsoft’s Xbox division, which oversees its gaming consoles, game studios, and services like Game Pass, has already gone through several rounds of layoffs in the past year. In 2023, the company shut down some gaming subsidiaries and made big staffing changes within Xbox.
Now that the Activision Blizzard deal is complete, Microsoft seems to be rethinking how it structures and spends money on its gaming business.
Reports also say the upcoming job cuts won’t be limited to gaming.
Earlier this month, Bloomberg reported that Microsoft plans to cut thousands of jobs across several departments, including sales. In May, the company reportedly let go of around 6,000 employees, mainly from engineering and product teams. However, that round didn’t impact customer-facing teams like sales and marketing much, but it’s speculated that they could be part of the layoffs this time.
One reason Microsoft is cutting costs is its major investment in artificial intelligence (AI) and cloud infrastructure. The company is spending billions to build data centres and develop AI-powered tools and services. To afford this, Microsoft is looking to save money in other areas of its business.
In recent months, it has also started outsourcing some tasks. For example, in April, Microsoft told employees that sales for small and mid-sized businesses would be handled by outside companies instead of its own staff. This move shows the company’s strategy to lower day-to-day expenses while focusing more on burgeoning areas like AI.
As of June 2024, Microsoft had around 2.28 lakh employees globally, including about 45,000 in sales and marketing. With so many people involved, the upcoming layoffs could be one of the biggest internal reshuffles the company has seen in recent years.
Although Microsoft hasn’t officially confirmed the job cuts, it has previously said that it regularly reviews its workforce to stay aligned with long-term goals.
Recent comments to investors and staff also suggest the company is tightening its focus on efficiency and cutting back on non-essential spending.
