Microsoft layoffs 2026: cuts hitting sales, consulting, and Xbox
Cris Tolomia
Wed, July 1, 2026 at 10:48 AM EDT
2 min read
- MSFT
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Microsoft is planning to cut thousands of jobs across its sales, consulting, and Xbox gaming divisions The company could announce the layoffs as early as next week, though the timing remains subject to change
Fewer than one in 40 of Microsoft’s approximately 220,000 employees are expected to lose their jobs. At least some of those let go will have the option of moving into other jobs at the company, the outlet added. Microsoft declined to comment on the report
This round of cuts is expected to be smaller than those carried out last year, partly because a voluntary retirement program the company launched earlier this year reduced the need for broader reductions. The program made buyouts available to U.S.-based workers ranked at level 67 or below, provided their age and tenure together totaled at least 70 years. Of the close to 9,000 workers who qualified, approximately a third chose to take the package. Sales employees with commission-based pay were excluded from the buyout program, according to an internal document viewed by Business Insider.
The prior year saw two separate rounds of reductions: roughly 6,000 departures in May 2025 and a larger wave of around 9,000 — representing about 4% of total headcount — that came in July 2025. Workforce reductions timed to the opening of Microsoft’s fiscal year, which begins July 1, have become a recurring pattern
The Xbox cuts had been signaled for weeks. As Quartz reported last month, Xbox CEO Asha Sharma warned employees that the business “cannot continue” on its current trajectory, calling for a broad reset that included potential marketing and budget cuts. In a memo co-authored with Xbox content chief Matt Booty, Sharma cited steep hardware component cost increases and declining revenue, noting that more than $20 billion had been invested in content, platform, and hardware subsidies over five years while annual revenue shrank by close to half a billion dollars over that period.
Microsoft’s most recent quarterly filing showed a 7% drop in gaming revenue to $5.3 billion for the period ending March 31, with hardware sales falling 33% and content and services revenue declining 5%
The workforce reductions arrive against a backdrop of surging AI investment at Microsoft, whose share price has shed roughly 19% over the past month — a decline Business Insider described as the worst single-month performance the stock has seen since the dot-com bust
