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Microsoft is laying off 4,800 employees

Most of the job losses are in Microsoft’s Xbox and commercial sales organizations.

Most of the job losses are in Microsoft’s Xbox and commercial sales organizations.

by Tom WarrenJul 6, 2026, 1:30 PM UTC

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**Satya Nadella in February 2026. Photo by Sven Hoppe / picture alliance via Getty ImagesPart OfXbox’s ‘reset’: all the news about Microsoft’s layoffs and studio changessee all updates *Tom Warren is a senior correspondent and author of Notepad, who has been covering all things Microsoft, PC, and tech for over 20 years.A year after cutting around 9,100 employees, Microsoft is making further layoffs today as it begins its new financial year. The software maker is laying off around 4,800 employees today, approximately 2.1 percent of its workforce. Most of the employees affected by today’s cuts are in Microsoft’s commercial sales business or the company’s Xbox division.

In an internal memo to employees, Amy Coleman, executive vice president and Microsoft’s chief people officer, blamed the job losses on a changing technology industry and the “need to adjust resources and roles and shift how we operate” to respond to how AI is impacting companies like Microsoft. “I also want to be direct that the roles eliminated today are not being replaced by AI,” says Coleman. “At the same time, what is true is that AI is changing how work gets done.”

The layoffs will impact around 1,600 Xbox employees today, with plans to eliminate a total of around 20 percent of Xbox jobs by the end of the financial year. Microsoft is also selling off four Xbox studios and weighing up selling another studio as it looks to “reset” its Xbox business after years of struggles. You can read more about the Xbox layoffs and impacted studios here.

“Decisions like these are never easy, and you have my commitment that we are constantly looking for ways to reduce the need for job eliminations,” says Coleman. “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.”

Microsoft had also been trying to avoid layoffs with its voluntary retirement program. US employees whose combined years of service added to their age totals 70 or more were eligible for voluntary retirement, and the package will include five years of access to Microsoft’s healthcare coverage, a lump sum cash severance payment, and six months of vesting for unvested stock options.

“More than 30 percent of eligible employees chose to participate in our recent voluntary retirement program, and we will continue exploring similar approaches in the future,” says Coleman. “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.”

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