Microsoft plans layoffs in sales, consulting and Xbox divisions to fund AI growth
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Microsoft is planning to cut fewer than 2.5% of its workforce across several departments. The company is reportedly shifting resources toward increased spending on artificial intelligence.
Amalgamated from MarketWatch (opens in new tab), Times of India (opens in new tab), Economic Times (opens in new tab), NDTV (opens in new tab), Business Insider (opens in new tab)
Microsoft is planning a new round of job cuts that will impact employees in the sales, consulting, and Xbox divisions. According to reports from Business Insider, these reductions are expected to affect fewer than 2.5% of the company's total workforce.
The move comes as the technology firm increases its investment in artificial intelligence capabilities. Reports from the Economic Times and NDTV indicate that while the current cuts are smaller in scale compared to previous measures, they will still impact thousands of roles across these specific sectors.
In July 2025, the company reported a larger reduction of approximately 4% of its workforce. The current strategy appears focused on streamlining operations to prioritize AI infrastructure and spending.
Media outlets including the Times of India have noted that while the number of roles affected in this round is smaller than previous cuts, the impact on the gaming-related Xbox division and professional consulting services remains a significant part of the company's restructuring plan.
Why this matters
This shift highlights a broader trend among major technology firms to consolidate resources toward artificial intelligence infrastructure. By reducing staff in traditional service and entertainment divisions, Microsoft is prioritizing its position in the rapidly evolving AI market.
What's confirmed / what isn't
Multiple independent sources confirm the target of under 2.5% for the upcoming layoffs and identify sales, consulting, and Xbox as the primary areas affected. The specific number of 'thousands' is reported consistently across multiple outlets but is not defined by a single exact figure in all reports.
Background
Microsoft is a global technology corporation that has significantly expanded its focus on cloud computing and generative artificial intelligence over the last several years.