Microsoft is reportedly preparing another round of layoffs that could affect thousands of employees across sales, consulting, and its Xbox gaming business. The move comes as the company keeps increasing spending on AI infrastructure and services while trying to control operating costs.
Business Insider reported on Tuesday, citing people familiar with the matter, that the cuts are expected to be smaller than last year’s reductions. The planned layoffs are said to affect less than 2.5% of Microsoft’s roughly 220,000-person global workforce.
What the cuts may hit
The expected reductions are likely to focus on sales, consulting, and Xbox. Some employees whose roles are eliminated could be offered other positions within the company immediately, according to one of the people cited in the report.
| Area | Reported Impact | Context |
|---|---|---|
| Global Workforce | Less than 2.5% | Microsoft has about 220,000 employees worldwide |
| Sales | Expected to be affected | Part of the reported reductions |
| Consulting | Expected to be affected | Part of the reported reductions |
| Xbox | Expected to be affected | Gaming division included in the cuts |
Microsoft told Benzinga that it had “nothing to share” on the report. The timing of the announcement could still change, though it may come as early as next week.
AI investment is changing staffing plans
The latest workforce reduction comes after Microsoft has continued pouring money into AI while looking for ways to keep expenses under control. Earlier this year, the company introduced a voluntary retirement program for eligible U.S. employees with long service histories.
About 9,000 employees qualified for that program, or roughly 7% of Microsoft’s U.S. workforce. Roughly one-third of eligible employees accepted the buyout offer, which reportedly reduced the need for deeper layoffs compared with last year.
The wider tech industry is seeing the same pressure
Technology companies have been cutting jobs at a faster pace as they expand AI infrastructure. More than 81,000 jobs were eliminated during the first quarter of 2026, according to the report.
Several companies have tied recent workforce changes to AI adoption. In May, Cloudflare Inc. said its decision to cut 20% of its workforce was driven in part by increased use of AI tools, while Cisco Systems Inc. said AI-related changes factored into its plan to eliminate about 4,000 jobs.
Not everyone agrees that AI is already the main reason for large-scale job cuts. In May, Nvidia Corp. CEO Jensen Huang criticized executives who blame layoffs on AI, calling such explanations “lazy” and saying companies have not yet deployed AI at a scale that would justify replacing large segments of their workforce.
Meta Platforms, Inc. also laid off about 8,000 employees, or roughly 10% of its workforce, during the same month and said it had scrapped plans to fill about 6,000 open positions. Coinbase Global Inc. and Block Inc. have also announced sizable layoffs as they expand the use of AI across their businesses.
