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KUALA LUMPUR, JULY 2026 – The job cuts follow Microsoft’s voluntary retirement programme launched in April, which was reported as the first programme of its kind in the company’s history. Microsoft Chief Human Resources Officer Amy Coleman told employees in an internal message that technology is now being “built, deployed and used” faster than at any point during her 27 years at the company.
The Xbox division is expected to account for the largest share of the layoffs. According to the report, Xbox will cut 3,200 jobs by the 2027 financial year, including 1,600 positions on Monday, based on a separate internal email from Xbox CEO Asha Sharma to staff.
The reduction reportedly represents about one-fifth of Xbox’s overall workforce. Sharma said the gaming division is expected to “return to growth in 2027,” while acknowledging that the year-long restructuring process will create additional challenges for employees.
As part of the restructuring, Microsoft will also separate four video game studios under its ownership. Compulsion Games and Double Fine Productions, both acquired by Microsoft in the 2010s, will return to independent operations, while Ninja Theory and Undead Labs have signed terms to move under new ownership.
Arkane Studios, the France-based game studio that joined Microsoft through the US$8.1 billion acquisition of ZeniMax Media in 2021, is reportedly in discussions with its works council over strategic options. The report also stated that Microsoft’s commercial business, which focuses on customer sales, will also be affected by the workforce reduction.
Microsoft said more than one-third of eligible employees had accepted the voluntary retirement offer, which targeted US-based staff at senior director level and below. The company’s shares were also reported to have fallen 19 percent this year as of Friday’s market close, underperforming several major technology peers.
Investor concerns have been linked to Microsoft’s artificial intelligence strategy and weaker performance in several segments, including Windows licensing, Surface devices and Xbox. Coleman said AI is changing how work tasks are carried out, but added that it is not directly replacing the employees affected by the layoffs.
