Microsoft has initiated a new round of staff reductions involving various sectors such as Xbox and commercial sales. In its internal memorandum, the management of the company stated that the external environment, client needs and the way in which technology is used are changing rapidly and that there is a need to adjust the allocation of resources, job placement and organizational structure.

The company says it's not AI's direct replacement.

According to Microsoft's Chief Manpower Officer, Amy Coleman, in his memo, the job that was cancelled was “not replaced by AI”. At the same time, however, she stated that AI was indeed changing the way work was done and that some day-to-day tasks could already be automated, which meant that staff needed to continue to learn new skills and adapt to new job requirements.

This statement appears in the context of the continued expansion of the AI input by Microsoft. Microsoft recently launched the Frontier Company business module, which focuses on the deployment of existing AI tools on a larger scale to the business client scene and with front-line engineering teams to move the landing. The report mentions that there are $2.5 billion in investment behind this layout.

Xbox Synchronization

In the game business, Microsoft released relatively limited information, indicating only that it was preparing for long-term development through reorganization. According to the company, the engineering team would also adjust its structure and priorities to client needs and future innovation directions.

The memorandum indicated that Microsoft would also transfer four video games studios under its flag to a new management system to maintain intellectual property rights and the continuation of research projects. This Xbox related layoffs occurred at a time when the game industry as a whole contracted and generated new opportunities for AI.

We've been working on a number of changes this year.

Microsoft offered a voluntary separation programme to some employees in April of this year, involving an estimated 5,500 people, but the company did not disclose the exact size at that time. Last year, Microsoft also lost approximately 15,000 employees in two rounds.

In addition to downsizing, according to the company, Microsoft is also trying to retain some of its staff through reassignment and retraining. According to Coleman, the company has relocated more than 4000 employees to new posts over the past year, of whom about 500 were added this month.

Additional information:It was reported that in the first half of 2026, nearly 154,000 people had been unemployed in the science and technology sector and that large-scale lay-offs had been carried out by large technology companies such as Meta, Oracle, Amazon and Cognizant.