Microsoft Plans Job Cuts Next Week; Thousands Of People Likely To Be Impacted

Microsoft is preparing to announce job cuts next week that will affect thousands of roles across sales, consulting and its Xbox gaming division, according to a report by Business Insider citing people familiar with the situation. The cuts are expected to impact less than 2.5 percent of the company's roughly 2,20,000-person global workforce.

Sales, consulting and Xbox in the crosshairs

The sources said that the reductions will hit sales and consulting roles in addition to jobs at the Xbox division. Some affected employees will be offered new roles immediately, one of the people said. The exact timing of the announcement could still change.

Smaller than last year's rounds

Microsoft has, in previous years, sometimes cut jobs around the start of its new fiscal year on July 1. Last year, the company eliminated 6,000 roles in May and a further 9,000 employees, or about 4 percent of its workforce, in July. This round is expected to be smaller, at under 2.5 percent of headcount.

Xbox layoffs specifically have been anticipated since gaming CEO Asha Sharma sent a memo to employees calling for a 'reset' of the business.

Cost control amid heavy AI spending

The planned cuts underscore Microsoft's efforts to rein in costs even as it ramps up spending on AI infrastructure. The company has also faced pressure from Wall Street over concerns that AI could eventually replace some software services, including, in theory, certain Microsoft offerings. The stock has slumped about 19 percent over the past month, according to the report, its worst month since the dot-com era.

Voluntary retirement programme softened the blow

Microsoft earlier this year announced a voluntary retirement programme offering buyouts to US employees at level 67 and below who were 70 or older in combined age and years of service. About 7 percent of Microsoft's 125,000 US workforce, or nearly 9,000 employees, was eligible, and roughly one-third of eligible employees took the buyout, in line with expectations, according to one of the people cited in the report. That take-up allowed Microsoft to cut a lower percentage of its workforce than last year, the person added.