Game over for Xbox jobs? Microsoft hits layoff button again, as staff braces for fourth layoff in 18 months

Microsoft will begin another wave of major job cuts next week, with its Xbox division and global sales teams expected to bear the brunt. According to Bloomberg, the cuts will affect thousands of workers and are part of a broader corporate reorganisation that aligns with Microsoft’s fiscal year-end on 30 June.

This will be the fourth significant layoff at Xbox in just 18 months. Inside the company, managers are already bracing for what they call a “substantial” round of reductions.

Xbox under the microscope after Activision deal
Xbox, once a growth engine, is now under scrutiny. Ever since Microsoft completed its $69 billion acquisition of Activision Blizzard in 2023, expectations have shifted dramatically. The pressure to deliver profits has increased.

Previous cost-cutting has already been sweeping. In January 2024, the company laid off 1,900 staff in the gaming division. Another 650 were let go in September. Several studios were closed—Tango Gameworks, best known for Hi-Fi Rush, and Arkane Austin, the team behind Redfall.

The latest cuts come not just to reduce expenses but to prepare Xbox for its next-generation console. The Verge reported that Microsoft is “restructuring Xbox distribution across central Europe,” with some operations shutting down completely.

Sales and marketing hit hardest
Microsoft’s sales and marketing team, one of its largest divisions with around 45,000 staff, will see some of the heaviest reductions. This move comes after the company already slashed 6,000 jobs in May and another 300 soon after.

These layoffs are part of a strategy to flatten the company's management structure and cut administrative overhead. Microsoft previously confirmed that it plans to eliminate around 3% of its global workforce of 228,000 employees this year.

Microsoft has not officially commented on the layoffs.

Massive AI spend driving strategic cuts
Microsoft’s internal shift is not happening in a vacuum. Behind the scenes, the company is making enormous investments in artificial intelligence. It plans to spend up to $80 billion on data centres and AI infrastructure this fiscal year alone. This means tough decisions elsewhere.

The company is prioritising engineering and technical roles over administrative and legacy ones. As reported earlier, the job cuts aim to “place greater emphasis on engineering capabilities over administrative roles.”

Tech layoffs ripple across the sector
Microsoft isn’t alone in slashing headcount. Across the tech industry, over 61,000 professionals have been laid off in 2025, according to Layoffs.fyi. The reasons are familiar—sluggish revenue growth, inflationary pressures, and the disruptive rise of AI.

At Google, hundreds of staff have been let go from Android, Pixel, and Chrome teams. This followed a merger between its Platforms and Devices units last year. In January, Google launched a voluntary exit programme that offered senior staff 14 weeks of severance pay, plus an additional week for every year served.

Amazon has also made cuts, trimming around 100 roles from its Devices and Services team, which manages products like Alexa and Kindle.

IBM replaces HR roles with AI
IBM is also pushing hard into automation. CEO Arvind Krishna recently told the media the company has embraced AI to streamline tasks and improve efficiency. He confirmed that IBM had removed around 8,000 roles—many from its Human Resources department—after introducing AI tools to handle those responsibilities.

In Krishna’s words: “Even with these technological advancements, IBM’s overall headcount has increased,” highlighting how automation savings are being redirected into departments like marketing and software development.

While the scale of Microsoft Xbox division layoffs is striking, it reflects a broader industry reckoning. The tech world is entering a period where profits matter more than headcount. Innovation is no longer about how many people are building something—but how quickly and efficiently they can do it using the latest tools, especially AI.

For those working in gaming or tech sales, the terrain is shifting fast. And it’s unlikely to stop here.