Following last year's reduction of roughly 9,100 roles, Microsoft is implementing additional workforce reductions as the new fiscal year begins. The company is eliminating approximately 4,800 positions, representing about 2.1 percent of its total staff. The majority of these positions are located within the commercial sales organization and the Xbox business.

According to an internal communication from chief people officer Amy Coleman, the changes stem from shifts in the technology sector and the requirement to realign resources in response to artificial intelligence developments affecting operations. Coleman clarified that the positions being removed are not being substituted by AI tools, though she noted that AI continues to transform work processes across the industry.

Around 1,600 roles in the Xbox division are affected immediately, with the company targeting an overall reduction of 20 percent in Xbox positions by the close of the fiscal year. Microsoft is also divesting four Xbox studios and evaluating the potential sale of a fifth as part of efforts to restructure the gaming segment after ongoing challenges.

Coleman emphasized that such decisions are difficult and stated the company remains focused on minimizing future eliminations through internal mobility. Over the previous year, more than 4,000 employees have been reassigned to different positions, with an additional 500 moved this month alone.

To help limit involuntary separations, Microsoft offered a voluntary retirement option to eligible US staff where age combined with years of service reached 70 or higher. Participants receive five years of continued healthcare access, a one-time severance payment, and six months of additional vesting on stock awards.

More than 30 percent of those eligible took part in the retirement program, and the company intends to consider comparable initiatives going forward while providing support to impacted individuals.