Microsoft Laying Off 9,000 Employees in Latest Restructuring Push (2025 Update)

Microsoft has announced another major round of layoffs, this time affecting around 9,000 employees—its largest workforce reduction in more than two years. The move impacts less than 4% of its global workforce and comes just weeks after a separate round of layoffs in May.

Part of a Wider Restructuring Strategy

The cuts began on Wednesday, July 2, just one day after the company kicked off its 2026 fiscal year. Microsoft confirmed the layoffs will span across teams, departments, and global locations, including a significant 830 job cuts at its Redmond, Washington headquarters.

This is Microsoft’s fourth round of layoffs in 2025, following:

• January – less than 1% of workforce cut
• May – about 6,000 employees laid off
• June – at least 300 more cut

Microsoft had 228,000 employees as of June 2024. While the company has not confirmed whether any of the recent headcount has been replaced, this latest round could bring total job losses to nearly 16,000 for the year.

Xbox, Sales, and Middle Management Hit Hard

One of the hardest-hit areas was Microsoft’s Xbox division, part of the company’s broader gaming empire. In a memo to staff, Xbox CEO Phil Spencer said the changes are meant to “position Gaming for enduring success” by eliminating layers of management and redirecting focus to strategic growth areas.

In addition to gaming, the sales team and other business units also saw cuts. Analysts note that Microsoft is moving aggressively to streamline management structures—a theme repeated by executives in recent earnings calls.

AI and Cloud Lead the Way

The layoffs come as Microsoft doubles down on AI and cloud infrastructure. The company is investing billions in data centers, AI chips, and productivity tools that integrate generative AI features. CFO Amy Hood previously confirmed a strong focus on building high-performing teams and increasing agility by reducing managerial overhead.

CEO Satya Nadella has also acknowledged the impact of AI on internal workflows, even noting that 20–30% of code for certain Microsoft projects is now written by AI tools.

Record Profits, But Strategic Cuts

Despite the layoffs, Microsoft remains financially strong. In the March 2025 quarter, the company reported:

• $70 billion in revenue
• $26 billion in net income

Microsoft also issued a 14% revenue growth outlook for the June quarter, largely driven by Azure cloud services and enterprise subscriptions.

Still, analysts believe the layoffs reflect a strategic shift. “They’re focused more and more on AI, cloud, and next-generation products,” said Wedbush analyst Dan Ives. “Xbox and legacy divisions are being trimmed. This is about efficiency and satisfying Wall Street.”

Gaming Division Faces a Reset

The cutbacks in Xbox come after Microsoft spent years expanding its gaming footprint:

• 2023: Acquired Activision Blizzard for $75.4 billion
• 2021: Bought ZeniMax Media (Bethesda Softworks) for $7.5 billion

Many of the acquired game studios are now seeing layoffs, with developers across North America and Europe sharing job loss updates on social media. It’s a stark contrast to the rapid expansion of previous years.

What’s your take on Microsoft’s shift toward AI and away from legacy divisions like Xbox? Let us know how you feel about the tech industry’s ongoing layoffs in the comments.

More…

• https://www.theglobeandmail.com/business/technology/science/article-microsoft-cutting-thousands-of-jobs-with-largest-layoff-in-years
• https://www.cnbc.com/2025/07/02/microsoft-laying-off-about-9000-employees-in-latest-round-of-cuts.html
• https://www.videogameschronicle.com/news/sources-everwild-has-been-cancelled-as-xbox-layoffs-hit-rare 
• https://www.overheretoronto.com/microsoft-to-lay-off-6000-employees-despite-strong-profits