Microsoft is laying off thousands of workers, its second mass layoff in months and its largest in more than two years.
The tech giant began sending out layoff notices Wednesday that hit the company’s Xbox video game business and other divisions.
The company declined to say how many people would be laid off but said that it will comprise less than 4% of the workforce it had a year ago.
Microsoft said the cuts will affect multiple teams around the world, including its sales division.
“We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” it said in a statement.
Xbox CEO Phil Spencer also sent a memo to employees Wednesday that said the cuts would position the video game business “for enduring success and allow us to focus on strategic growth areas.”
It would also “follow Microsoft’s lead in removing layers of management to increase agility and effectiveness,” Spencer wrote.
Microsoft employed 228,000 full-time workers as of last June, the last time it reported its annual headcount. The company said Wednesday that its latest layoffs would cut close to 4% of that workforce, which would be about 9,000 people. But it has already had at least three layoffs this year and it’s unlikely that new hiring has matched the amount lost.
Until now, this year’s biggest layoff was in May, when Microsoft began laying off about 6,000 workers, nearly 3% of its global workforce and its largest job cuts in more than two years as the company spent heavily on artificial intelligence.
Microsoft also cut another 300 workers based out of its Redmond, Washington headquarters in June, on top of nearly 2,000 who lost their jobs in the Puget Sound region in May, according to notices it sent to Washington state employment officials.
The layoffs announced in May were heavily focused on people in software engineering and product management roles, according to lists the company sent to employment agencies in Washington and California — where the cuts also hit Microsoft offices in the San Francisco Bay Area.
Microsoft’s chief financial officer Amy Hood said on an April earnings call that the company was focused on “building high-performing teams and increasing our agility by reducing layers with fewer managers.”
The company has repeatedly characterized its recent layoffs as part of a push to trim management layers, but the May focus on software engineering jobs has fueled worries about how the company’s own AI code-writing products could reduce the number of people needed for programming jobs.
Microsoft CEO Satya Nadella said earlier this year that “maybe 20, 30% of the code” for some of Microsoft’s coding projects “are probably all written by software.”
The latest layoffs, however, seemed centered on slower-growing areas of the company’s business, said Wedbush Securities analyst Dan Ives.
“They’re focused more and more on AI, cloud and next-generation Microsoft and really looking to cut costs around Xbox and some of the more legacy areas,” Ives said. “I think they overhired over the years. This is Nadella and team making sure that they’re keeping with efficiency and that’s the name of the game in Wall Street.”
The trimming of the Xbox staff follows Microsoft’s years-long expansion of the business surrounding its gaming console, culminating in 2023 with the $75.4 billion acquisition of Activision Blizzard — the California-based maker of hit franchises like Call of Duty and Candy Crush. Before that, in a bid to compete with Sony’s PlayStation, it spent $7.5 billion to acquire ZeniMax Media, the parent company of Maryland-based video game publisher Bethesda Softworks.
