Insider report suggests Microsoft could cut up to 2.5% of its workforce as the company continues investing heavily in artificial intelligence.
Microsoft is reportedly preparing another round of job cuts that could affect thousands of employees across multiple divisions, including its Xbox gaming business, sales operations and consulting teams.
According to reports citing an insider familiar with the matter, the technology giant plans to reduce its workforce by up to 2.5%. Based on Microsoft’s reported headcount of approximately 228,000 employees, the move could impact more than 5,000 workers.
Microsoft has not officially confirmed the reported layoffs.
The reported cuts would follow a series of workforce reductions announced over the past two years as major technology companies continue reshaping operations amid growing investments in artificial intelligence.
In July 2025, Microsoft reduced its workforce by roughly 4%, affecting thousands of employees across various business units.
The latest reported restructuring is expected to focus primarily on sales and consulting teams, while Microsoft’s Xbox division is also believed to be among the most affected areas.
The report has drawn attention to the gaming business, particularly after Microsoft recently announced another round of price increases for Xbox consoles. The company cited rising component and manufacturing costs as reasons for the higher prices.
Industry observers have noted that many technology companies are increasingly redirecting spending from traditional operating expenses toward artificial intelligence infrastructure, including data centres, advanced chips and AI development platforms.
Microsoft has emerged as one of the industry’s largest AI investors through its continued expansion of AI-powered services and products, including its Copilot platform.
Company executives have previously indicated that AI tools can automate certain workplace tasks, potentially reducing the need for some roles while creating demand for new skills and positions.
The reported layoffs come as technology firms worldwide continue balancing cost controls with significant investments in AI technologies, which many view as the next major growth driver for the sector.
Microsoft has yet to provide details on the timing, scope or potential impact of the reported workforce reductions. Until the company issues an official statement, the reported plans remain unconfirmed.
