Microsoft is laying off 4,800 employees

Published: Monday, July 6, 2026 at 1:30 pm

Microsoft has announced significant workforce reductions, with approximately 4,800 employees being laid off as the company enters its new financial year. This latest round of cuts represents about 2.1 percent of Microsoft's global workforce and follows a substantial reduction of around 9,100 employees a year ago.

The majority of affected employees are within Microsoft's commercial sales business and its Xbox division. In an internal communication, Amy Coleman, executive vice president and chief people officer, cited the evolving technology landscape and the pervasive influence of artificial intelligence as key drivers for these adjustments. Coleman emphasized that while the eliminated roles are not being directly replaced by AI, the technology is fundamentally altering how work is performed across the company.

The Xbox division is particularly impacted, with around 1,600 employees affected by today's layoffs. Microsoft plans to reduce its Xbox workforce by approximately 20 percent by the end of the financial year. This strategic reset for the Xbox business also involves the sale of four Xbox studios and consideration of divesting another.

Coleman acknowledged the difficulty of these decisions, stating that the company is continuously seeking ways to minimize the necessity for job eliminations. She highlighted Microsoft's efforts to redeploy employees into new roles aligned with the company's strategic priorities, noting that over 4,000 employees have been transitioned to new positions in the past year, with an additional 500 this month.

To mitigate the need for layoffs, Microsoft also implemented a voluntary retirement program. This program was available to U.S. employees whose age and years of service combined totaled 70 or more. Participants received benefits including five years of healthcare coverage, a lump sum severance payment, and six months of vesting for unvested stock options. Over 30 percent of eligible employees opted for this program, and Microsoft intends to explore similar initiatives in the future. The company reiterated its commitment to supporting affected employees with care and respect while striving to create opportunities and reduce job eliminations where feasible.

BNN's Perspective:
These layoffs underscore the dynamic and often challenging nature of the technology sector. While the impact on employees is undoubtedly significant, Microsoft's stated efforts to redeploy staff and offer voluntary retirement programs suggest a measured approach to workforce adjustments. The company's acknowledgment of AI's transformative influence on work processes highlights a broader industry trend that businesses must navigate to remain competitive. The focus on strategic realignment, particularly within the Xbox division, indicates a commitment to long-term viability, even if it necessitates difficult short-term decisions.

Tags: Microsoft layoffs, workforce reduction, commercial sales, Xbox division, artificial intelligence, AI impact, job eliminations, voluntary retirement program, employee support, technology industry, Amy Coleman

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