Microsoft to cut 4,800 jobs; Xbox workers most hit due to ‘reset’ plans

Microsoft is planning to cut its global workforce by almost 2.1 per cent by laying off 4,800 employees, including a large number of workers at its Xbox video game business.

Massive layoffs at Xbox

Those who will be asked to leave include 1,600 Xbox workers. More job cuts are expected this year as part of a broader reorganisation designed to “reset” Xbox as it faces heightened competition, the company said on Monday (July 6).

Also read: Meta announces 8,000 layoffs amid AI-led workforce restructuring

“Our business today is not healthy,” said a memo from Xbox CEO Asha Sharma, who took over the gaming division earlier this year.

“We are operating at margins that are 3-10x lower than comparable platform and publishing businesses,” she said.

Xbox is currently facing stiff competition from Sony’s PlayStation and Nintendo’s Switch, which boast of an approximate market share of 45 per cent and 24-27 per cent respectively against Xbox’s 23-27 per cent.

Sharma said the industry, in which Xbox competes with PlayStation and Switch, is facing a severe “hardware crisis” as costs soar for console components.

Also read: Amazon plans second round of layoffs as part of 30,000 job cuts

She said to expect another 1,600 job cuts over the course of the fiscal year that began last week. The company is also spinning off four video game development studios previously acquired by Microsoft.

Jobs not being replaced by AI: CPO

Microsoft’s Chief People Officer Amy Coleman attributed the bigger job cuts in the software company to unspecified changes in customer needs.

“Our business is changing because the world around it is changing,” Coleman wrote in a blog post.

“I also want to be direct that the roles eliminated today are not being replaced by AI,” she said.

Also read: Inside AI gold rush: Massive tech layoffs contrast with jaw-dropping Samsung bonuses

The layoffs followed voluntary buyouts that Microsoft began offering to about 8,750 people in May. More than 30 per cent of eligible workers accepted those voluntary retirement offers, Coleman said on Monday.

As part of the overhaul in Xbox, four studios will leave the gaming platform. Compulsion Games and Double Fine Productions will reportedly operate independently and retain their intellectual property, while Ninja Theory and Undead Labs will join new owners.