Microsoft may be ready to cut thousands of jobs as its AI bill keeps climbing.
Business Insider says the tech giant is preparing layoffs as soon as next week, with sales, consulting, and Xbox among the areas expected to be affected. The cuts would cover fewer than 2.5% of employees, making the round smaller than last year’s reductions but still large enough to reach thousands of workers.
The timing is telling. The company is still spending heavily on AI while customer-facing and gaming teams face another round of cost pressure.
Microsoft’s planned cuts
Microsoft has roughly 220,000 employees, so a reduction of less than 2.5% would still be substantial in terms of headcount. Some employees may be offered new roles immediately, so not every affected role will result in an exit.
Timing may change, but early July would fit the tech giant’s usual budget cycle. July 1 marks the start of its fiscal year, a period when workforce changes have occurred before.
Last year’s reductions were larger. The company cut 6,000 jobs in May and another 9,000 in July. A smaller percentage this time would still leave another major round on the books.
Why the company is cutting
AI spending is the central pressure. Microsoft has been pouring money into data centers, infrastructure, and AI products, while investors keep watching how much of that spending turns into revenue.
Business Insider also noted Wall Street concern that AI could replace some software services, including products sold by Microsoft. Staff cuts could give the company more room to defend margins as it keeps funding one of its biggest growth bets.
Xbox has its own set of problems. In a June memo, Xbox leaders Asha Sharma and Matt Booty told employees the business needed a “reset.” They cited rising hardware component costs, an overextended studio system, and platform infrastructure that had become too complex.
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Sales, consulting, and Xbox face risk
Reductions in sales and consulting could be felt first by enterprise customers, since those teams help manage accounts, guide deployments, and support companies using Microsoft’s products.
Changes may not be immediate for every customer. Over time, though, leaner teams can mean fewer dedicated contacts, longer waits for support, or more pressure to use standardized services.
Xbox could see some of the most visible fallout. Gadget Review named Compulsion Games, Double Fine, Ninja Theory, Arkane and Undead Labs among studios discussed as possible closure or spin-off candidates, though no outcome has been confirmed.
Earlier this year, the tech company offered voluntary retirement buyouts to eligible US employees. Nearly 9,000 workers qualified, and about one-third accepted. Another layoff round would indicate the company still wants to reduce costs after that softer exit path.
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