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Microsoft is preparing for another significant round of layoffs, with its Xbox division reportedly in the crosshairs as part of a broader restructuring strategy. The move, anticipated before the end of its fiscal year on June 30, comes amid mounting pressure on the tech giant to streamline operations and bolster profitability following its $69 billion acquisition of gaming giant Activision Blizzard last year.

According to sources cited by Bloomberg, the impending layoffs will impact multiple teams within the Xbox unit, which oversees console development, game studios, and services such as Game Pass. While the exact number of employees affected remains uncertain, the downsizing is expected to be considerable and is likely to coincide with company-wide changes affecting Microsoft’s global sales operations.

Ongoing Restructuring In Gaming

The Xbox division has already experienced multiple workforce reductions in the past year, including the closure of select gaming subsidiaries and major personnel shifts. These new layoffs indicate a continued reassessment of the gaming segment’s structure and cost strategy, particularly in light of the company’s growing investment in high-growth areas such as artificial intelligence (AI) and cloud computing.

Now that the integration of Activision Blizzard is underway, Microsoft appears to be optimizing its internal resources, aligning business units to focus on long-term strategic priorities.

Broader Impact Beyond Gaming

The expected Xbox layoffs are part of a larger workforce reorganization. In May, Microsoft reportedly let go of approximately 6,000 employees, mainly from engineering and product teams. Earlier this month, Bloomberg reported the company is planning to trim thousands more, including roles in global sales operations, an area largely untouched in prior cuts.

Additionally, Microsoft has begun outsourcing certain functions to reduce costs. In April, the company notified employees that sales for small and mid-sized business software would be handled by external partners instead of in-house teams.

Shifting Priorities And Fiscal Discipline

Microsoft’s recent cost-cutting drive is linked to its aggressive push into AI and cloud services, which require significant capital investment in data centers and infrastructure. By trimming operations in lower-priority areas, the company aims to redirect resources into future-facing technologies.

Despite no official confirmation of the layoffs, Microsoft has consistently stated that it regularly evaluates its workforce structure to align with its long-term goals. The company had approximately 228,000 employees globally as of June 2024, with nearly 45,000 in sales and marketing, roles that may now face risk amid this restructuring.