Microsoft is poised to lay off thousands of employees, expected to begin next week, as it accelerates cost reductions and invests heavily in AI.

Microsoft is poised to cut less than 2.5% of its workforce as early as next week, across sales, consulting, and the Xbox business, amid a trend of tech companies cutting costs.

On July 1, 2026, at 8:33 AM, Reuters reported that Microsoft is preparing a new round of layoffs, representing less than 2.5% of its total workforce, or several thousand positions. An announcement could be made as early as next week, according to Business Insider, citing sources close to the matter.

The report indicates that these cuts will affect employees across several departments, including sales, consulting, and the Xbox gaming business unit, which is already facing cost pressure and undergoing business restructuring.

According to documents filed with the U.S. Securities and Exchange Commission (SEC) , as of June 30, 2568, Microsoft had approximately 228,000 employees worldwide. If the workforce were to be reduced by less than 2.5%, this would amount to no more than approximately 5,700 jobs.

Previously, Bloomberg reported that Xbox planned a major workforce reduction, along with cuts to marketing and other expenses, after the company raised the price of its game consoles worldwide, citing high electronics component costs as the reason.

Meanwhile, The Information reports that Microsoft is considering options for restructuring the Xbox business, including spinning it off as a subsidiary or restructuring it entirely under the parent company.

This isn't Microsoft's first layoff. In July 2568, the company announced the layoff of nearly 4% of its total workforce, one of the largest workforce reductions in years.

Microsoft's workforce reduction aligns with the trend in the U.S. technology industry to continue controlling costs and shifting budgets towards investing in artificial intelligence (AI) infrastructure, which requires significant capital.

Meta previously announced plans to reduce its entire workforce by 10%, while Amazon plans to lay off approximately 16,000 employees globally to improve operational efficiency and support long-term investments in AI.

Reference: www.reuters.com