Microsoft announced it will lay off approximately 9,000 employees, which represents less than 4% of its global workforce. The cuts affect various teams, geographies, and experience levels, with reports suggesting the sales organization will be particularly impacted. This action follows several previous rounds of layoffs in 2025, including a reduction of over 6,000 jobs in May. Coinciding with the start of the company’s fiscal year, Chief Commercial Officer Judson Althoff is taking a two-month sabbatical. A company spokesperson stated the changes are necessary to position the company for success.
A stated goal for the layoffs is to reduce the number of management layers within the company to increase efficiency. In a memo to the gaming division, CEO of Gaming Phil Spencer mentioned following this corporate lead to increase agility. The workforce reduction occurs even as the company reported strong financial performance in the preceding quarter, with nearly $26 billion in net income. Despite the layoffs, company executives had projected double-digit revenue growth for the June quarter, citing expected expansion in cloud services and software subscriptions.
The company’s gaming division experienced significant cuts, with reports of hundreds of layoffs and the cancellation of several games that were in development, including Perfect Dark and Everwild. The Initiative, one of the studios behind Perfect Dark, was reportedly closed. Layoffs were widespread across gaming subsidiaries such as King, ZeniMax, Raven Software, and Turn 10 Studios. An internal email from Xbox Game Studios head Matt Booty cited a need to adjust priorities and focus resources. These changes come as the division is reportedly under pressure to improve profit margins following its 2023 acquisition of Activision Blizzard.
