Microsoft is reportedly planning another round of layoffs that will affect around 2.5% of its global workforce. The layoffs could be announced as early as next week, reports Business Insider. Based on the company’s last reported headcount of 228,000 full-time employees as of June 30, 2025, the latest round could impact around 5,000 to 5,700 employees. While the percentage is relatively small, it would still be one of Microsoft’s notable workforce reductions in recent years.
The reported job cuts are expected to affect several business units instead of a single team. Employees in sales, consulting, and the Xbox gaming division are likely to be among those impacted. The report suggests that Microsoft is also reviewing the structure of its gaming business, including reducing marketing budgets and streamlining operations after the integration of Activision Blizzard. Some employees whose roles are eliminated may reportedly be offered other positions within the company, helping reduce the number of compulsory layoffs.
The layoffs come as Microsoft continues to invest heavily in AI. The company has made AI the centre of its long-term growth strategy and is spending billions of dollars to expand AI infrastructure, including new data centres, cloud capacity and advanced AI chips. Microsoft had earlier said it planned to spend about $80 billion in fiscal 2025 on AI-enabled data centres, and more recent guidance suggests its overall capital expenditure could reach around $190 billion in 2026. The software giant is also adding AI features across its major products like Azure, Microsoft 365, Windows, GitHub, and Copilot.
However, despite these rising investments, Microsoft’s core business remains strong. The company reported $82.9 billion in quarterly revenue in its latest earnings, up 18% year-on-year, driven by strong demand for Azure cloud services and AI products. Its AI business has also reached an estimated $37 billion annual revenue run rate, while Azure revenue grew about 40% from a year earlier.
The timing is also important because Microsoft’s new financial year begins on July 1. The company has often used the start of a new fiscal year to reorganize teams, reset budgets and make structural changes. Earlier this year, Microsoft also introduced a voluntary retirement programme for eligible long-serving employees in the United States, which reportedly helped reduce the need for a larger number of mandatory job cuts.
This is not the first time Microsoft has reduced its workforce. The company laid off around 10,000 employees in 2023 as the technology industry adjusted after the pandemic-era hiring surge. More job cuts followed in 2024, particularly in the gaming division. Then in 2025, Microsoft announced another major round of layoffs affecting about 4% of its global workforce.
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Ashutosh is a Senior Writer at The Tech Portal, largely reporting on new tech, and intersection of technology and business. Ashutosh’s career spans across nearly a decade of technology writing across multiple platforms and languages.
