Microsoft has announced the layoff of approximately 9,000 employees globally — about 4% of its workforce — marking its largest round of job cuts in over two years and the second mass layoff this year.
The tech giant began notifying affected employees this week, with significant impacts on its Xbox video game division and other departments, including 830 workers from its Redmond, Washington headquarters.
Microsoft Australia could not confirm how many local employees were affected but stated the company is implementing structural changes to stay competitive in a rapidly evolving market.
The layoffs affect multiple global teams, including the sales division, and are part of broader organisational changes aimed at improving agility and focusing on strategic growth areas such as artificial intelligence and cloud computing.
Xbox CEO Phil Spencer said in an internal memo that reducing management layers would increase effectiveness and better position the gaming business for long-term success.
As of June 2024, Microsoft had around 228,000 full-time employees. With three rounds of layoffs already this year, job losses are mounting, with the company previously cutting about 6,000 employees in May and another 300 in June.
The current restructuring comes as Microsoft continues to invest heavily in AI infrastructure, anticipating around USD 80 billion in related expenses last fiscal year.
While the company frames the layoffs as part of an effort to streamline management, concerns persist that AI-driven code generation tools could reduce demand for software engineers.
Analysts suggest Microsoft’s recent cuts are also driven by a shift away from legacy divisions like Xbox towards high-growth areas like AI and the cloud. The company had previously invested heavily in the gaming sector, acquiring Activision Blizzard and Bethesda Softworks, but some of those studios are now experiencing workforce reductions.
Microsoft has pledged to support affected employees while continuing to prioritise long-term innovation and operational efficiency.
