Microsoft Slashes 9,000 Jobs in Biggest Layoff Since 2022, Xbox Division Hit

Microsoft has announced a significant reduction in its global workforce, cutting around four percent of its employees.

On Wednesday, July 2, the tech giant confirmed that approximately 9,000 jobs will be eliminated across different teams and locations worldwide. Reports indicate that professionals at all experience levels are likely to be impacted.

The company often introduces organizational changes at the end of its fiscal year. However, this time, the announcement came on the second day of the month, catching many by surprise.

Organisational Changes to Align with Market Dynamics

According to a report by CNBC, a Microsoft spokesperson stated that the company will continue to implement organizational changes necessary to position itself and its teams for success in a dynamic marketplace.

This latest layoff follows similar developments earlier this year. In January, Microsoft revealed plans to reduce one percent of its workforce based on performance evaluations.

In May, the software giant cut over 6,000 jobs, followed by another 300 in June. In 2023, the company laid off 10,000 employees.

These back-to-back layoffs indicate Microsoft’s concerted efforts to manage its workforce size. The company’s largest layoff occurred in 2014 when it cut nearly 18,000 jobs after acquiring Nokia’s device and services business.

AI and Automation Drive Workforce Restructuring

Although Microsoft has not explicitly stated the reasons for the latest layoffs, reports suggest that the rise of AI-driven tools, especially coding assistants, may be a contributing factor.

Google recently launched its version of a coding assistant, while Microsoft is reportedly adjusting its internal workflows around similar tools.

These AI tools enhance software development processes through automation, reducing the need for traditional coding tasks.

Both Microsoft and Google are leading in AI research and development spending, transforming the nature of developer roles within their organizations.

As AI tools take over some conventional tasks, developers and other technical professionals are increasingly affected by these restructuring efforts.

Layoffs Impact Multiple Divisions, Including Gaming

Microsoft’s latest layoffs, the most significant in over two years, have affected several divisions globally, including sales and the gaming sector. According to reports, 830 employees at Microsoft’s Redmond, Washington headquarters have lost their jobs.

A memo from Xbox CEO Phil Spencer, as reported by AP, informed gaming division employees that the layoffs are intended to position the business for “enduring success” and allow for a stronger focus on strategic growth areas.

Despite the layoffs, Microsoft’s stock has performed well. While it was down in premarket trading on Wednesday, it remains up 16 percent year-to-date and has surged 150 percent over the past five years.

Microsoft Faces Social Media Criticism Over H-1B Hiring

The layoffs have sparked strong reactions on social media, with many questioning Microsoft’s approach to H-1B visa hiring amid job cuts. In 2024, the company reportedly had 4,725 H-1B visas approved, with unverified claims circulating that it requested as many as 14,181 visas this year.

One user wrote on X, formerly known as Twitter, “Microsoft has submitted applications for over 6,000 H-1B visas for software engineers. Seems Microsoft wants to replace current employees with lower wage immigrants.”

Another added, “Why did Microsoft lay off 9,000 employees but request 14,181 H-1B visas?- Because they wanted to ‘reboot’ their workforce with a global upgrade!”

A third person tweeted, “As Microsoft announces 9,000 layoffs, they have 4712 applications for H-1Bs so far in 2025. They typically get a 99%+ approval rate from the Department of Labor. This is economic treason. Approving a single H-1B right now is a grave betrayal of your fellow citizens.”

Previous Layoffs and Financial Performance

In addition to the May job cuts, Microsoft also laid off another 300 workers last month at its Redmond headquarters.

Nearly 2,000 employees lost their jobs in the Puget Sound region in May, according to information the company shared with Washington state employment officials, as reported by AP.

Despite these layoffs, Microsoft continues to report strong financial performance.

For the March quarter, the company posted a net income of nearly $26 billion on revenue of $70 billion, maintaining its status as one of the most profitable companies in the S&P 500 index.

Focus on Building High-Performing Teams

Microsoft’s Chief Financial Officer, Amy Hood, stated during the company’s April earnings call that Microsoft is focusing on building high-performing teams and increasing agility by reducing management layers.

The company maintains that these layoffs and restructuring efforts are part of its broader strategy to adapt to changing market conditions, streamline operations, and enhance efficiency as AI and automation reshape the tech industry.