Microsoft is reckoning with the tech sector’s ongoing contraction and has launched an internal restructuring. According to sources cited by Business Insider, the company is set to announce a fresh round of layoffs. The cuts are expected to affect less than 2.5% of its total global workforce.
Given Microsoft’s scale, that percentage still translates into thousands of workers. As of its most recent public figure — dated June 30, 2025 — the company employs at least 228,000 people. A 2.5% reduction means more than 5,000 employees risk losing their jobs.
Which divisions are most exposed
The latest layoff wave will target thousands of workers across sales, consulting, and the Xbox division. Announcements are expected to be formalized as soon as next week, barring last-minute changes.
This is no longer a surprise. Microsoft has announced staff cuts in July multiple times over recent years — the timing is deliberate, since July 1 marks the start of the company’s new fiscal year. Last year alone, more than 9,000 positions were eliminated, followed by an additional 6,000 in May 2025.
The surge in artificial intelligence (AI) investment and its accelerating diffusion across the industry have clearly weighed on employment at multiple levels. Even Microsoft — one of the world’s most powerful technology companies — is not immune to this structural trend.
The Xbox restructuring
The Microsoft cuts had been anticipated, and not only because they have become something of an annual ritual. Xbox chief executive Asha Sharma is overseeing a broad overhaul of the gaming division, much of which is expected to unfold over a 100-day reorganization window.
There is some relative good news for affected employees: the final headcount reduction may be smaller than initially feared, since a significant number of workers have opted for voluntary early retirement. The company offered incentives to US-based employees at level 67 or below who qualified under the so-called “Rule of 70” — a provision under which an employee’s age plus years of service must sum to at least 70. For example, a person aged 50 with 20 years at Microsoft would qualify.
According to Business Insider data, roughly 9,000 Microsoft employees were eligible for this incentive, and about one-third accepted. For those who did not, formal layoff notices are expected within the coming week.
Editor’s note
This article was originally published in Italian on money.it by Pasquale Conte on July 03, 2026 as «Microsoft licenzia fino a 5.500 dipendenti. Il taglio colpisce Xbox, vendite e consulting». It has been translated and adapted for an international audience by the Money.it International desk.
