Microsoft plans cuts affecting Xbox, sales and consulting

Microsoft is preparing to eliminate thousands of roles as early as next week, with the reductions expected to affect Xbox and customer-facing sales and consulting teams. The cuts would amount to under 2.5% of the company’s roughly 228,000 employees. The company has not formally announced the changes.

Timing could align with Microsoft’s fiscal-year review, which ends June 30. If finalized, the reductions would be smaller than last year’s round when roughly 4% of the workforce was cut.

Xbox has faced pressure after recent console price increases and reductions in marketing spending. Microsoft plans to raise Xbox console prices globally from August and has pointed to a worsening shortage in components such as storage and memory. Some internal discussions have reportedly included broader restructuring options for the gaming unit, including possible changes to studios.

Sales and consulting roles typically manage customer relationships, win contracts and support software implementations. Reductions in those teams would affect staff who work directly with enterprise clients and who support product deployment and services.

The reported cuts come as technology companies continue heavy investment in artificial intelligence infrastructure while trimming headcount in some traditional roles. Jobs research firm Challenger, Gray & Christmas reported that AI had been cited in 87,714 job cuts in 2026 through the end of May. Other large firms have announced workforce reductions this year, including a company that began layoffs affecting about 10% of its staff, a second firm that confirmed 16,000 corporate job cuts in January as part of a broader plan totaling roughly 30,000 since October, and an enterprise software provider whose workforce fell by about 21,000 in fiscal 2026 while restructuring around AI and cloud services.

Industry leaders and analysts have pushed back on using AI as the sole explanation for layoffs. Nvidia CEO Jensen Huang called that explanation ‘lazy.’ Helen Poitevin, a Gartner vice president analyst, noted that workforce reductions may create budget room but do not automatically produce returns from autonomous technologies. Babak Hodjat, Cognizant’s chief AI officer, argued that AI is sometimes invoked as a reason for cuts that stem from earlier overhiring or weak cost management. OpenAI CEO Sam Altman used the term ‘AI washing’ to describe companies blaming AI for decisions they may have made for other reasons.

Company spokespeople have not provided comment on the latest review. Details on the exact number of positions and the specific teams affected remain limited.