Microsoft's workforce faces further cuts as the company prioritises AI development. #
Microsoft is reportedly preparing to announce another round of layoffs just months after cutting thousands of jobs as it continues to invest heavily in artificial intelligence.
According to reports, the company is expected to reduce less than 2.5% of its workforce, with the announcement potentially coming as early as next week. The latest cuts are expected to affect thousands of employees across several divisions, including sales, consulting, and the Xbox gaming business.
While the exact timing remains uncertain, reports suggest some workers who lose their current roles could be offered alternative positions within the company. Microsoft has not commented on the reports. The latest move comes as technology companies continue to reduce staff while increasing spending on AI infrastructure, with Microsoft among the firms committing billions of pounds towards expanding its AI capabilities despite growing investor concerns over rising costs.
What the Latest Microsoft Cuts Would Mean #
Business Insider reported that Microsoft plans to cut fewer than 2.5% of its workforce, citing people familiar with the matter. The company had around 228,000 full-time employees as of 30 June 2025, according to an SEC filing, although another report put its workforce at about 220,000 people.
The reported layoffs are expected to affect thousands of roles across sales, consulting and Microsoft's Xbox gaming division. Sources also told Business Insider that some employees impacted by the restructuring could be offered different roles within the company.
Microsoft declined to comment on the reports reportedly.
The reported cuts follow another major round of layoffs announced in July 2025, when Microsoft said it would eliminate nearly 4% of its workforce in one of its biggest reductions in recent years. The company has carried out several rounds of job cuts since the period following the Covid-19 pandemic. It first announced plans to lay off 10,000 employees in January 2023 and continued reducing headcount over the following two years as it redirected resources towards artificial intelligence. According to a BBC News tally cited by MarketWatch, another 6,000 jobs were cut before a further 9,000 workers were laid off last July.
Xbox Also Faces Changes #
The latest reported layoffs come as Microsoft continues increasing its investment in artificial intelligence. The company has reportedly committed around £140 billion towards AI infrastructure, while investors have become increasingly concerned about the level of capital spending among the so-called 'Magnificent Seven' technology companies and whether those investments will deliver strong returns.
The Xbox gaming business is also expected to be affected. Earlier this month, Bloomberg News reported that Xbox was preparing major layoffs alongside cuts to marketing and other budgets. The gaming division had already increased console prices worldwide, citing a worsening global components crisis.
Separately, The Information reported earlier in June that Microsoft was considering options for the Xbox business, including a potential spinoff or restructuring as a wholly owned subsidiary.
The latest reported workforce reductions also come amid similar moves across the technology sector. Meta has announced plans to cut 10% of its workforce this year, while Amazon has outlined plans to eliminate roughly 16,000 jobs globally as major technology companies continue balancing workforce reductions with increased investment in artificial intelligence.
Despite reports of further layoffs, Microsoft shares rose more than 1% in premarket trading. However, the company's stock has fallen 19% over the past month, according to the information provided, reducing its market value by close to £442 billion.
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