Microsoft to cut under 2.5% of workforce in latest layoffs, Business Insider reports

Microsoft to cut under 2.5% of workforce in latest layoffs, Business Insider reports

Microsoft is preparing to eliminate under 2.5% of its workforce, according to a report from Business Insider on Tuesday, June 30, 2026. The company may announce the cuts as early as next week, coinciding with the start of its new fiscal year on Wednesday, though sources noted the timing remains subject to change.

The planned reductions will impact thousands of roles. Specifically, the layoffs are expected to hit the sales and consulting divisions, as well as the Xbox gaming unit. Some employees affected by the cuts may be offered new roles within the company immediately.

Microsoft has declined to comment on the report. According to an SEC filing from last year, the company had roughly 228,000 full-time employees as of June 30, 2025. A cut of under 2.5% of a 220,000-person workforce equates to fewer than 5,500 workers, according to Business Insider.

A Pattern of Reductions

This would mark the third major round of layoffs for the software giant in just over a year. The company previously slashed 6,000 jobs last May and eliminated another 9,000 roles—representing nearly 4% of its workforce—in July 2025.

To mitigate the number of roles cut in this current round, Microsoft launched a voluntary retirement buyout earlier this year for U.S. Employees whose combined age and years of service totaled 70 or higher. A source told Business Insider that about a third of the 9,000 eligible workers accepted the offer.

Other recent reductions include the cutting of hundreds of Azure roles in China.

The AI Pivot and Financial Pressure

The layoffs come as Microsoft balances massive investments in artificial intelligence against mounting cost concerns. The company has committed $190 billion toward new infrastructure in the coming years. This shift toward AI capital expenditure has occurred as the company faces fears that bots could make traditional software tools obsolete.

Financial volatility has also hit the company; Microsoft shares dropped 19% in June, the worst monthly performance for the stock since the dot-com crash of the early 2000s.

The broader technology sector is seeing similar trends. Meta announced plans this year to cut 10% of its workforce, and Amazon planned to eliminate roughly 16,000 jobs globally. According to a report from Challenger, Gray & Christmas released Wednesday, AI was the leading reason for announced layoffs in June for the fourth consecutive month. Since 2023, AI has been cited in 173,568 job cut announcements.

"The pace of layoffs cooled considerably in June, similar to plans last June, and as is typical for summer months,"

Andy Challenger, workplace expert and chief revenue officer at Challenger, Gray & Christmas, via New York Post

"That said, the cuts we are seeing remain concentrated in technology, and artificial intelligence continues to reshape how companies think about headcount."

Andy Challenger, workplace expert and chief revenue officer at Challenger, Gray & Christmas, via New York Post

Xbox Under Pressure

The Xbox division is facing a particularly difficult period. New Xbox CEO Asha Sharma described the company as not in a healthy spot amid declining revenue and called for a resetting of the organization.

The gaming unit is bracing for significant cuts to marketing and other budgets. Over the last two years, Xbox has canceled new game releases and closed studios. The company has also weighed spinning off several studios, including Double Fine, Ninja Theory, and Compulsion Games. Beyond staffing, Microsoft is considering options for the entire Xbox unit, including restructuring it as a wholly owned subsidiary or a potential spinoff.

Hardware costs have also climbed. Following a move by Apple to hike prices for tablets and computers by as much as $500 due to chip shortages, Xbox implemented its third price hike on hardware since late 2025, raising console prices by $150 worldwide. The company cited a deepening global components crisis as the driver for these increases.

The company has yet to provide a formal timeline or a division-by-division breakdown of the upcoming layoffs.