Microsoft Xbox Cuts 4,800 Roles in Major Restructuring

Microsoft announced significant job cuts impacting its Xbox division, with 4,800 roles being eliminated. Xbox CEO Asha Sharma communicated the decision to employees via email, characterizing it as "the most significant restructuring in Xbox history." Sharma stated that 3,200 roles, including the 1,600 impacting Xbox today, would be cut by the end of the financial year in July 2027. An additional 1,600 employees are leaving Microsoft immediately as part of this broader workforce reduction.

As part of the restructuring, Sharma outlined a move towards a "flatter organization" within Xbox, aiming to reduce management layers to a maximum of five, and in some cases, three. This contrasts with the current structure where some work reportedly passes through as many as 14 management layers. The future organizational makeup will feature "individual contributors focused on building," "player-coaches" who balance team development with hands-on work, and "directly responsible individuals (DRIs)" tasked with decision-making.

Sharma also detailed plans to streamline operations by improving tools, simplifying the code base, consolidating shared services, and reducing vendor spend by 50%. A source familiar with Xbox indicated that the company anticipates laying off 20% of its workforce over the fiscal year, emphasizing that the restructuring is "not about AI automation." Impacted employees are set to receive severance packages, healthcare continuation, and career transition support.

Microsoft EVP and chief people officer Amy Coleman confirmed in a separate memo that the "changes mostly fall within our Commercial and Xbox organizations." Coleman attributed the need for resource and role adjustments to broader industry shifts and the rapid transformation of technology development, deployment, and usage. She stated that the company must "adjust resources and roles and shift how we operate so we can have the greatest impact for our customers" as "our business is changing because the world around it is changing."