Microsoft has announced that it is laying off approximately 9,000 employees, marking its second major round of job reductions in just a few months and its largest in over two years. The layoffs began on Wednesday, impacting various divisions including the Xbox video game business.
The reductions will primarily affect teams worldwide, including 830 positions at Microsoft’s Redmond, Washington headquarters. This decision reflects the company’s need to adapt to a “dynamic marketplace,” though Microsoft has not disclosed the overall number of layoffs, only clarifying that this figure represents around 4% of its workforce from a year ago.
In a memorandum directed to gaming division employees, Xbox CEO Phil Spencer emphasized that these layoffs aim to position the video game segment for sustained success and to enhance the company’s focus on strategic growth areas. Spencer indicated that the organization will streamline management layers to improve agility and effectiveness within the Xbox business.
As of June 2024, Microsoft employed approximately 228,000 full-time workers, but it is estimated that the recent layoff of around 9,000 would equate to nearly 4% of that workforce. This follows previous job cuts earlier in the year, including around 6,000 layoffs in May and 300 additional reductions last month. The continuing trend has sparked concern regarding the impact on software engineering roles, particularly in light of Microsoft’s recent advances in AI technology, which could potentially reduce the demand for programming positions.
Microsoft’s focus appears to be shifting increasingly towards artificial intelligence and cloud computing, leading to the streamlining of operations in older sectors such as Xbox. Analysts, including Wedbush Securities’ Dan Ives, suggest that the company may have overhired in previous years, and these layoffs are part of a broader strategy to enhance operational efficiency.
The downsizing of the Xbox team comes on the heels of significant expansion in the gaming sector. Microsoft notably acquired Activision Blizzard for $75.4 billion in 2023, strengthening its position against competitors like Sony’s PlayStation. However, many employees affected by this latest round of layoffs have expressed their distress on social media, signaling a challenging period for those seeking new employment opportunities.
Despite the recent changes, the focus on AI and cloud technologies presents a hopeful outlook for Microsoft’s future. By reallocating resources to these innovative areas, the company could drive long-term growth and adapt to evolving market demands while positioning itself at the forefront of technological advancements.