Microsoft to cut 4,800 jobs, restructure Xbox business

New Delhi: Microsoft is set to cut around 4,800 jobs globally, representing about 2.1% of its workforce, as part of a major restructuring of its gaming business. According to multiple media reports, the layoffs are expected to include around 3,200 roles in the Xbox division, with about 1,600 employees reportedly receiving layoff notices immediately. The restructuring comes as Microsoft looks to improve returns from its gaming business after years of heavy investment. As part of the overhaul, Microsoft is also planning to divest or spin off up to five game studios, reports said. Compulsion Games, the studio behind South of Midnight, and Double Fine Productions, known for Psychonauts, are expected to become independent studios. Ninja Theory and Undead Labs are also likely to be spun off to focus on expanding their respective franchises, Senua and State of Decay 3. French game developer Arkane Studios, which is currently developing a game based on Marvel's Blade, has reportedly begun consultations with its workers' union to explore restructuring options. The move marks another strategic shift in Microsoft's gaming business. Despite spending billions of dollars to expand Xbox, including its acquisition of Activision Blizzard, the company has struggled to close the gap with rivals Sony PlayStation and Nintendo. In recent years, Microsoft has increasingly focused on making its games available across multiple platforms instead of relying solely on Xbox-exclusive titles to drive console sales. According to reports, Microsoft's Chief People Officer Amy Coleman told employees that the eliminated roles were not being replaced by artificial intelligence. The reported job cuts come as technology companies continue to balance rising investments in artificial intelligence with efforts to improve profitability. Companies including Amazon and Meta have also announced workforce reductions this year as they ramp up AI spending. Microsoft is expected to announce its quarterly financial results later this month. The company has projected record capital expenditure of around $190 billion in 2026, largely driven by investments in AI infrastructure and data centres, according to reports.