Microsoft has announced another round of workforce reductions, with 4,800 employees set to lose their jobs worldwide. The move represents around 2.1% of the company's global workforce and includes significant cuts within its Xbox gaming division, where the company is undertaking a broader restructuring.
The latest layoffs come alongside changes to Xbox's business operations, as the gaming arm looks to reposition itself amid growing challenges in the console market, news agency Associate Press reported.
Xbox division faces the biggest impact
A large share of the layoffs will affect Microsoft's gaming business. Around 1,600 employees at Xbox have already been impacted, and the company has indicated that more job cuts are expected during the current fiscal year.
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Xbox CEO Asha Sharma, who took charge of the gaming division earlier this year, said the restructuring is aimed at resetting the business.
"Our business today is not healthy," Sharma said in a memo. "We are operating at margins that are 3-10x lower than comparable platform and publishing businesses."
{{/usCountry}}"Our business today is not healthy," Sharma said in a memo. "We are operating at margins that are 3-10x lower than comparable platform and publishing businesses."
{{/usCountry}}She also pointed to mounting pressure on the gaming hardware business.
"The industry, in which Xbox competes with Sony's PlayStation and Nintendo's Switch, is facing a severe 'hardware crisis' as costs soar for console components."
According to Sharma, another 1,600 Xbox job cuts are expected over the course of the fiscal year that began last week. As part of the reorganisation, Microsoft is also spinning off four video game development studios that it had previously acquired.
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Broader Microsoft layoffs
The Xbox reductions form part of a wider round of layoffs across Microsoft.
Chief People Officer Amy Coleman said the company's decision reflects changing customer requirements rather than the replacement of employees with artificial intelligence.
The latest layoffs come after Microsoft introduced voluntary buyout offers in May for around 8,750 employees.
According to Coleman, more than 30% of eligible workers accepted those voluntary retirement offers. The newly announced job cuts follow that programme as Microsoft continues its workforce reorganisation.
(With inputs from AP)