Microsoft plans third layoff round in a year, targeting under 5,500 roles

Microsoft will reduce its workforce by fewer than 5,500 positions next week, according to a report citing unnamed sources. The cuts will affect sales, consulting, and Xbox gaming divisions and represent less than 2.5 percent of the company's 220,000 employees.

The announcement is scheduled shortly after the start of the company's new fiscal year on Wednesday. Some affected employees will be offered alternative roles inside the firm.

Prior reductions This will be Microsoft's third major layoff round in just over a year. The company eliminated 6,000 positions in May 2025 and 9,000 positions, or 4 percent of its workforce, in July 2025. A voluntary retirement buyout offered earlier this year to U.S. employees whose combined age and years of service reached 70 drew about one-third of the 9,000 eligible workers.

Xbox and sector context Xbox leadership has cited the need for a reset after declining revenue. The unit has closed studios, canceled game releases, and raised console prices by $150 this year. A Challenger, Gray & Christmas report released Wednesday stated that nearly one-third of all announced job cuts in 2026 have occurred in the technology sector, with artificial intelligence listed as the leading reason for the fourth consecutive month.