• Microsoft (MSFT) announced 4,800 job cuts, primarily in sales and Xbox units, as part of a broader restructuring to prioritize cloud and AI.
  • The layoffs represent about 4% of Microsoft's workforce and come amid a sector-wide trend of tech companies trimming headcount.
  • Affected employees will receive severance packages and support, according to an internal memo seen by Business Insider.

Ongoing Restructuring

Microsoft is cutting approximately 4,800 jobs across its sales organization and Xbox division, according to a person familiar with the matter. The move, which represents about 4% of the company's global workforce, is part of a strategic realignment aimed at refocusing resources on high-growth areas like cloud computing and artificial intelligence.

“These changes are necessary to align our structure with our strategic priorities,” a Microsoft spokesperson said in a statement. The company declined to comment on specific numbers but confirmed the cuts are effective immediately.

Deeper into Cost Optimization

The layoffs hit the sales force particularly hard, as Microsoft shifts to a more digital sales model and reduces overlapping roles following its $69 billion acquisition of Activision Blizzard (ATVI). The Xbox unit also saw significant reductions, though the company emphasized that its commitment to gaming remains strong.

“We are focused on building the best possible experiences for players,” said a Microsoft gaming executive in an internal email. “These decisions are difficult but necessary for our long-term success.”

Broader Industry Context

Microsoft joins a wave of major tech companies trimming payrolls in 2024, including Google, Amazon, and Meta, as the industry moves past pandemic-era overhiring. The cuts come despite strong financial performance: Microsoft reported $62 billion in revenue in its most recent quarter, up 17% year-over-year, driven by Azure and AI services.

Impact on Staff and Operations

Employees affected by the cuts will receive severance packages, career transition services, and extended health benefits, according to the memo. The company is also offering some workers the opportunity to apply for other roles internally.

“We’re committed to supporting our teams through this transition,” the spokesperson added.

Correction: An earlier version of this article misstated the total number of employees affected. The correct figure is 4,800, not 5,000.