Microsoft Cuts 4,800 Jobs as New Financial Year Begins

Microsoft is laying off around 4,800 employees on July 6, 2026, the first day of its new financial year. The reductions represent about 2.1 percent of the company's total workforce and fall primarily in its commercial sales business and Xbox division. The Xbox unit is losing about 1,600 positions at once.

Reuters reported that Microsoft plans to eliminate roughly 20 percent of Xbox jobs by the end of the financial year. The company is also selling four Xbox game-development studios and weighing the sale of a fifth. In an internal memo, Amy Coleman, executive vice president and chief people officer, attributed the cuts to shifts in the technology industry and the need to adjust resources amid AI's impact on operations.

Coleman stated that the eliminated roles are not being replaced by AI, while noting that AI is changing how work is performed. Microsoft had offered a voluntary retirement program to U.S. employees whose age plus years of service totaled 70 or more.

The program provides five years of healthcare coverage, a lump-sum severance payment, and six months of vesting for unvested stock options. Coleman said more than 30 percent of eligible employees participated. Over the past year the company has redeployed more than 4,000 employees into new roles, including 500 this month.