Microsoft may lay off about 5,500 employees: Report
01 Jul 2026

Microsoft is preparing for a fresh round of job cuts, according to Business Insider.

The layoffs are likely to affect thousands of employees across several divisions, including sales and consulting as well as the Xbox gaming business.

The tech giant's latest regulatory filings show it had some 228,000 employees as of June 30, 2025.

Layoffs smaller than last year's cuts
Impact assessment

The upcoming layoffs are expected to impact fewer than 2.5% of Microsoft's workforce, making them smaller than last year's cuts.

Some employees affected by the restructuring may be offered new roles immediately, though the exact timing of the announcement could still change.

The move comes as Microsoft continues its cost-cutting efforts while investing heavily in artificial intelligence infrastructure.

Xbox gaming division to be one of the hardest hit
Division impact

The Xbox gaming division is expected to be one of the hardest hit by these layoffs.

Earlier this month, Bloomberg reported that Xbox was planning major job cuts along with marketing and other budget reductions.

Separately, The Information reported that Microsoft has been considering strategic options for Xbox, including a possible restructuring or spinning it off as a wholly owned subsidiary.

Recently, Microsoft offered voluntary retirement packages to eligible employees
Retirement offer

Earlier this year, Microsoft had offered voluntary retirement packages to eligible US employees below senior leadership levels.

About one-third of the eligible employees accepted the offer, which reportedly helped reduce the scale of these planned layoffs.

However, sales staff with commission-based compensation were excluded from this program as per an internal document reviewed by Business Insider.