Microsoft is laying off 4,800 employees, amounting to 2.1% of its global workforce, as the company kicks off a new financial year with restructuring across sales and Xbox. The news came in a memo from Amy Coleman, Microsoft’s chief people officer, who told employees the changes are meant to keep the company aligned with a “fast-changing industry.“Coleman framed the cuts as part of a larger shift rather than a one-off correction. “Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it,” she wrote, adding that resources and roles need to move with the business.
Xbox and commercial sales bear the brunt of cuts
Most of today’s layoffs hit Microsoft’s Commercial and Xbox organisations. The Commercial Business changes build on last week’s Frontier Company announcement, which embeds Microsoft engineers directly with customers on their tech deployments. Xbox, meanwhile, is going through what CEO Asha Sharma has called its most significant restructuring in the division’s history, with four gaming studios shifting to new management to protect their intellectual property and ongoing projects.Coleman kept her comments on Xbox brief, saying the division is “restructuring to position the business for long-term success” and that engineering teams across Microsoft will keep evolving to match customer needs.
Microsoft says it’s still trying to avoid layoffs wherever possible, but further restructuring is likely
Coleman was careful to stress that today’s cuts aren’t the company’s first move. “Decisions like these are never easy, and you have my commitment that we are always looking for ways to reduce the need for job eliminations,” she wrote, adding that redeploying people is always the first option before letting them go. Over the past year, Microsoft says it moved more than 4,000 employees into new roles, including 500 just this month.That commitment comes with a clear caveat, though. Coleman made clear Monday’s cuts aren’t a one-time correction. “We are still early on this journey, and there will be more changes ahead,” she wrote, telling employees that other parts of the business will need to make similar adjustments in the months ahead.The pattern backs that up. Microsoft cut around 9,100 jobs a year ago, and has now followed it with today’s 4,800 cuts as it starts its new financial year. Coleman tied both rounds to the same broader recalibration, driven by how fast the tech industry itself is shifting, rather than treating them as isolated decisions.She also made a direct ask of the employees staying on: check in on colleagues who are leaving, and use personal networks to help them land elsewhere. “Reach out and check in on your colleagues,” she wrote, encouraging staff to “share what makes them exceptional” and help create opportunities that might not surface otherwise.
Read Microsoft HR head Amy Coleman’s full memo to Microsoft employees
“When I stepped into this role, I promised to communicate more openly with you and share the “why” behind our decisions.Today we are eliminating around 4,800 roles, about 2.1% of our global workforce, as we focus our people, investments, and energy on the priorities that will keep Microsoft positioned to deliver for customers in a fast-changing industry. The people whose jobs are impacted today are our colleagues and friends. They have made meaningful contributions to Microsoft, and we are deeply grateful for everything they have done.Decisions like these are never easy, and you have my commitment that we are always looking for ways to reduce the need for job eliminations. Whenever possible, our priority is to place people into new roles aligned to the company’s highest priorities and greatest areas of opportunity. Over the past year, we have redeployed more than 4,000 employees into new roles, including another 500 this month. We will also transition four of our gaming studios to operate under new management, with the goal of preserving both their intellectual property and ongoing projects. In addition, more than 30% of eligible employees chose to participate in our recent voluntary retirement program, and we will continue exploring similar approaches in the future. While this doesn’t change the difficulty of today’s news, we will continue to do everything we can to create opportunities for our people, reduce the need for job eliminations where possible, and responsibly support those affected with care and respect.The “why” is this: Our business is changing because the world around it is changing. The way technology is built, deployed, and used is transforming faster than at any point in my time here. Our customers’ needs are shifting, the business models that serve them are shifting, and that means the work itself – what we do, where we focus, and how we’re organized – has to transform too. Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it. That means we will need to adjust resources and roles and shift how we operate so we can have the greatest impact for our customers.I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves. Our customers are navigating this same shift, and they’re counting on us to help them through it. We can’t do that well unless we’re doing it ourselves. This comes down to two commitments: making the decisions needed to drive differentiated customer value, and supporting the people affected by them.First, we will make the hard changes required to build differentiated products and services that deliver differentiated customer value. We are aligning our investment, people, and energy to our business priorities. Today’s changes mostly fall within our Commercial and XBOX organizations. In our Microsoft Commercial Business, they build on last week’s Frontier Company announcement, reshaping how we work and embedding our engineering experts alongside customers so we can help them accelerate their technology deployments. In XBOX, we are restructuring to position the business for long-term success. Engineering teams across the company will also evolve their structure and priorities to meet customer needs and innovate for the future.Second, we will do this thoughtfully. As mentioned above, we are working on alternative solutions to job eliminations, and beyond this, we will continue to invest in equipping employees with new skills, including in AI. For those who are impacted, we provide financial support and resources to help them take their next step.I know many of you want to help those who are leaving but aren’t sure how. Reach out and check in on your colleagues. Use your network to bring people together, share what makes them exceptional, and help create connections to opportunities that might not happen otherwise.We are still early on this journey, and there will be more changes ahead; other parts of our business will need to make similar changes. Each time, you can hold us to the two commitments.During my time at Microsoft, I’ve seen this company reinvent itself again and again. What makes that possible has always been our people – their resilience, creativity, and willingness to keep learning.Thank you for everything you bring to Microsoft.Amy”