Microsoft Cuts 4,800 Jobs and Overhauls Xbox Operations

Microsoft Workforce Reductions

According to НВ — Техно: Microsoft has announced another round of layoffs, planning to let go of approximately 4,800 employees. The Xbox gaming division is the hardest hit, with 1,600 people being dismissed. The company intends to slash its management layers from 14 down to a maximum of 5-and ideally just 3-signaling a major restructuring of its organizational hierarchy.

Additionally, Microsoft plans to eliminate roughly 3,200 more positions within the Xbox division by the end of fiscal year 2027. This reorganization in the gaming unit is the largest in the company's history. According to Asha Sharma, Xbox's profitability significantly trails that of comparable platforms and game publishers. Despite initiatives like Game Pass, expanding the game library, and developing cross-platform services, these efforts have not delivered the anticipated growth.

Shifts in Gaming Business Strategy

Microsoft is also reprioritizing its gaming business. Studios Compulsion Games and Double Fine Productions will operate independently, while Ninja Theory and Undead Labs will come under new leadership. As part of these changes, the company has created a new division called Frontier Company, allocating $2.5 billion for this purpose.

Amy Coleman noted that the company is restructuring due to rapid shifts in technology and customer needs. Many routine tasks can now be automated, requiring employees to acquire new skills and adapt to changes. She emphasized that the current layoffs do not mean these positions are being replaced by artificial intelligence.

Despite the large-scale cuts, Microsoft is trying to retain some workers by offering retraining or transfers to other roles. Over the past year, more than 4,000 employees have moved into new positions within the company, and about 500 more were reassigned this month alone. This reflects the company's efforts to adapt to changes in the tech sector, where nearly 154,000 workers were laid off globally in the first half of 2026.

The reduction in Microsoft's workforce-especially in the Xbox gaming division-highlights the new challenges the company faces amid rising competition and shifting consumer preferences. Streamlining management layers and restructuring may boost efficiency, but they also underscore the need to adapt to evolving technologies and market conditions. In this way, Microsoft is striving to remain competitive in an industry that is constantly changing.

As Microsoft navigates these significant layoffs, the gaming division is also grappling with the aftermath of recent senior management departures. This shift in leadership may further complicate the company's strategy as it seeks to stabilize operations amidst ongoing changes. For more insights on the potential impact of these resignations on Xbox's future, read our detailed coverage regarding looming layoffs at Xbox.