Microsoft is preparing another significant workforce reduction, with the announcement expected as early as next week. The software giant is planning to cut under 2.5% of its global workforce in its latest round of layoffs, Business Insider reported on June 30, 2026, citing people familiar with the matter. Based on Microsoft’s most recently disclosed headcount of approximately 228,000 full-time employees as of June 30, 2025, a 2.5% cut would translate to approximately 5,700 jobs. The company has not publicly confirmed the report.
GeekWire confirmed the details of the report with a person familiar with the company’s plan. The timing follows a familiar pattern — Microsoft often restructures its operations around the close of its fiscal year on June 30, and the cuts would come just as the new fiscal year begins.
“Microsoft is planning to cut under 2.5% of its workforce in the latest round of layoffs that could be announced as early as next week, Business Insider reported, citing sources. The layoffs will impact thousands of roles, including sales and consulting, as well as jobs at the Xbox gaming division.”~Reuters
Xbox Takes The Biggest Hit:
The divisions most directly in the crosshairs are sales, consulting, and the Xbox gaming unit. Xbox, which raised prices of its gaming consoles worldwide earlier this year citing a deepening global components crisis, is planning major layoffs and significant cuts to marketing and other budgets, Bloomberg News reported earlier this month.
The Xbox situation extends beyond basic headcount reductions. According to The Information, Microsoft is also evaluating options for its Xbox game unit, such as a spinoff or restructuring as a wholly owned subsidiary. Price increases, budget cuts, layoffs, and a prospective ownership restructure all point to a division that is under substantial strategic pressure.
About a third of the approximately 8,750 eligible US employees took a voluntary buyout earlier this year, reportedly allowing the company to cut a smaller share of its workforce through layoffs than a year ago. The company is on pace to spend more than $100 billion building AI and cloud infrastructure in the fiscal year that just ended — up from $88.7 billion the year before with about two-thirds going to the chips that power AI.
“Microsoft is preparing to cut thousands of jobs next week, continuing to rein in operating costs as the company pours unprecedented sums into AI infrastructure. The cuts span Xbox, sales and consulting. Microsoft isn’t commenting on the report.”~GeekWire
Second Major Layoff In 12 Months: A Pattern Of AI-Driven Restructuring
This is not the first significant workforce reduction Microsoft has carried out in recent memory. In July 2025, the company said it would lay off nearly 4% of its workforce, in one of its largest layoffs in recent years. The latest round, at under 2.5%, is smaller in percentage terms but still represents thousands of individual jobs across multiple global divisions.
Microsoft’s stock closed Tuesday at $373.02, down 19% in the previous month and at a 52-week low, as Wall Street doubts if its big AI spending will pay off. The share price decrease provides context to the company’s cost pressures; investors are questioning if the unprecedented capital spending on AI infrastructure will result in rapid enough revenue growth to justify the outlay.
The layoffs come amid a broader wave of restructuring across the tech industry, which has shed more jobs than any other sector this year. US tech companies have announced 123,653 cuts so far in 2026, up 66% from the same stretch of 2025, according to a report from outplacement firm Challenger, Gray & Christmas.
“Microsoft is planning to cut under 2.5% of its workforce in a new round of layoffs expected to be announced as early as next week, per sources. The cuts will affect thousands of roles in sales, consulting and the Xbox gaming division.”~Business Insider
Tech Sector’s Biggest Year For Layoffs: Meta, Amazon, Oracle All Cutting
Microsoft’s planned reductions are part of a sweeping industry trend. Across the technology sector, Meta announced plans this year to cut 10% of its workforce, and Amazon laid out plans to eliminate roughly 16,000 jobs globally. Oracle shed 21,000 jobs, almost 13% of its workforce in the past year as the company deployed AI across its operations.
The common thread running through all of these reductions is the same: companies are reallocating labour costs toward AI infrastructure investment, replacing human capacity with automated systems where possible while funnelling capital into the physical compute and data centre expansion that AI services demand.
The situation is particularly tense at Microsoft. The firm has pledged to spending more than $100 billion on AI and cloud infrastructure in a single fiscal year, putting great pressure on the company to deliver returns while also controlling operating costs across a worldwide organization of over 200,000 employees. The Xbox issue, in particular, exemplifies a business line where the strategic justification has grown more difficult to explain as AI spending competes for limited capital resources.
