Xbox Division in the Firing Line as Microsoft Plans Fourth Layoff in 18 Months

Microsoft is gearing up for another significant round of job cuts, targeting its Xbox division and global sales teams. According to Bloomberg, these layoffs will impact thousands of employees as part of a larger corporate restructuring aligned with Microsoft's fiscal year-end on 30 June. This marks the fourth major layoff at Xbox in just 18 months, with managers anticipating a "substantial" reduction.

The tech industry is witnessing widespread layoffs, with over 61,000 professionals losing jobs in 2025, according to Layoffs.fyi. Companies like Google and Amazon have also reduced their workforce due to slow revenue growth and inflationary pressures. Google's Android, Pixel, and Chrome teams faced cuts following a merger last year. Meanwhile, Amazon trimmed around 100 roles from its Devices and Services team.

Impact on Sales and Marketing

Microsoft's sales and marketing department, one of its largest divisions with approximately 45,000 employees, will face significant reductions. This follows earlier cuts of 6,000 jobs in May and an additional 300 soon after. The strategy aims to streamline management structures and reduce administrative costs. Microsoft plans to cut about 3% of its global workforce of 228,000 employees this year.

The Xbox division has been under scrutiny since Microsoft's $69 billion acquisition of Activision Blizzard in 2023. Once a growth engine for the company, Xbox now faces increased pressure to deliver profits. Previous cost-cutting measures included laying off 1,900 gaming division staff in January 2024 and another 650 in September. Studios like Tango Gameworks and Arkane Austin were closed during these efforts.

AI Investments Drive Strategic Changes

Microsoft's internal changes are driven by massive investments in artificial intelligence (AI). The company plans to spend up to $80 billion on data centres and AI infrastructure this fiscal year alone. As a result, Microsoft is prioritising engineering roles over administrative ones. The job cuts aim to "place greater emphasis on engineering capabilities over administrative roles."

IBM is also embracing automation by replacing human resources roles with AI tools. CEO Arvind Krishna stated that IBM removed around 8,000 positions from its HR department after introducing AI solutions for those tasks. Despite these changes, IBM's overall headcount has increased as savings are redirected into marketing and software development departments.

Broader Industry Trends

The tech industry's focus is shifting towards efficiency and innovation rather than headcount. Companies are increasingly relying on AI tools to streamline operations while maintaining profitability. For those working in gaming or tech sales, the landscape is rapidly evolving as businesses prioritise speed and efficiency over workforce size.