Microsoft Reportedly Plans to Lay Off Under 2.5% of Total Workforce - News
by William D'Angelo , posted on 01 July 2026 / 2,330 Views
Following reports of major layoffs and potential studio closures at Microsoft's Xbox division, people familiar with Microsoft's plans have told Business Insider job cuts are expected to be announced soon and will hit across Microsoft.
Thousands of employees are expected to be laid off across the company with cuts expected at sales and consulting, as well as the previously mentioned Xbox division.
The overall number laid off will be smaller than the previous couple of years with less than 2.5 percent of the company's total workforce of 220,000 employees. That would put the total number laid off at below 5,500 across the company.
The sources are expecting Microsoft to announce the layoffs next week, however, the exact timing might change. Some of those laid off will be offered new roles immediately.
Microsoft laid off around 15,000 employees in 2025 with 6,000 let go in May and another 9,000 in July.
Bloomberg's Jason Schreier previously reported Ninja Theory, Double Fine, and Compulsion Games were all facing potential closure and were in talks with Microsoft to go independent. GameBeat's Dean Takahashi this week reported State of Decay 3 developer Undead Labs is in the mix of possibly being shut down. The Verge is also reporting Arkane might be facing closure as well.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can follow the author on Bluesky.
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Microsoft employee headcount:
2016: 114,000
2018: 131,000
2020: 163,000
2022: 221,000 (doubled in 6 years, and they were already huge)
there are a serious excess of employees working at microsoft right now, they could fire 60,000 people and still be at 2020 levels
Market Worth more means jack when it comes to anything anyone invests in because of Elon. Tesla is like the 11th best selling car manufacturers but the company's value is more than that of all other car companies combined. They don't need that many employees when they aren't making anything.
At least MS has obvious products... sure there is a lot of investment inflation there too mind you.
Tesla is number 8 in the world by earnings. The thing the stock market cares about. And FUTURE earning potential.
The Model Y is the number one selling vehicle in the world, not just in the US. Global dominance. What do you mean they don't have a product? Have you seen the size of the factory in China? It is double the size and production of the factory in Fremont.
Out of all the huge car companies in China, there is no longer a single western car company in the top ten, except for Tesla, which has 2 of the top 10 selling cars in China.
No Toyota, no VW, no GM, only Tesla has survived in China, the world's largest car market. Nissan's last hope is over.
There is not a single gas car left in the list.
https://www.autopunditz.com/post/china-top-10-best-selling-cars-may-2026-nev
"they aren't making anything" yikes...
SpaceX yearly revenue projected for 2026 is $18.7b. MS is over $300b.(Twitter is around $2.5b btw)
The only musk company that makes significant revenues(although a fraction of MS) is Tesla and guess what, they have over 134k employees.
already said in response to a different comment revenue is not the goal, earnings are, and spacex is growing 30+ percent per year, all one of the kind businesses without competition
obviously people are buying in response to the new business opportunities that low cost to orbit provides, entirely new businesses, like Starlink (and the military applications, they will be larger than every defense manufacturer, quite possibly)
Revenue dictates how many employees you need.
In regards to profits it makes $101.8b. That’s more than all your musk companies combined and multiplied by about 10.
"your musk companies" oh jeeze
i own microsoft stock, A LOT of it, not stock in any of musk's companies
i was just trying to point out they have a lot of employees accomplishing very little with Windows or Xbox that's all
for example Bioware almost died from releasing Anthem (a 5+ million seller) and The Veilguard (~100,000 concurrent players on PC alone nevermind the console players), in fact most of Bioware's employees were fired, justifiably
meanwhile Microsoft have released countless games with <10,000 players, almost every game except for Forza 6 and the Oblivion Remaster released in the last 5 years
Their Revenue in 2016 was under $100b and now it’s over $300b.
Selling more products, having more users requires more employees.
They expanded their Xbox division by well over 20k people during that time,(and increased their game output by hundreds of percent)and they created an entirely new AI division and massively grew cloud computing.
i agree, microsoft's net income went up 5x over that time too, very impressive, which is why i bought a lot of the stock
i'm just saying their recent performance leaves a lot to be desired, i'm not sure there is a good correlation between employee head count and revenue here, they mostly sell software licenses after all
Softwares licenses need support. MS revenue is driven by the business sector. They need a lot of support staff and people constantly working through issues.
i'm not terribly convinced of that, our company pays a fortune for microsoft and citrix support, and you basically get very little for your $100,000 per year support contract (though Microsoft support is better than Citrix, Citrix has gone way down hill)
i think sometime you need to look at the big picture right? Microsoft has a lot of very poorly performing divisions, you can't just point to a success, that's why Xbox is in trouble
Imagine how much worse their support is when they fire 60k people.
fair enough, if they need those operational personal, you are right
i think the obvious problems with employee productivity in the gaming sphere can colour my view of the rest of the company, perhaps unfairly
i mean employee count is a very difficult metric to compare
Amazon needs a lot of employees, they make a lot of money of them though
Google has hardly any, way more money than Microsoft, but also not the same business as Microsoft
i think the employee count in the gaming and windows software group are not showing results, they need better, not more, imo
But they are not treated as" disposable"
Lol
Staff are disposable, thats the reality of life. Im sure out of 220k, those 2.5% aren't hitting targets
Microsoft is in big trouble. The rest of the Nasdaq is doing great. Microsoft stock last week nearly dropped to $350 versus their previous high of $555. Almost a 37 percent drop this year while other stocks are hitting record highs. So much for my pension...
That's why they need to take action. The company is in big trouble. Their AI efforts are tied to Sam Altman and OpenAI yet the best AI products are Claude, Google, and Grok. Microsoft's holdings in OpenAI are worth $135 billion dollars. Crazy. Yet the company itself might be worth nothing. If OpenAI fails, you can't imagine the carnage across Microsoft that would result. Any employee that is not productive should be gone, and that would be half of Xbox for sure.
If NVidia supported Bazzite why would people use Windows? Free software should not be competing against your $100 billion dollar piece of software, and yet it does. Microsoft's strengths have always been their relationships with Intel and NVidia and other companies like Dell and IBM / Lenovo that push them to the top. I'd stop using Windows 11 and use Bazzite if NVidia would release native drivers for it. That's weakness.
Xbox is completely dead with countless games barely attracting 1000 players. Political and poor quality developers.
Personally I think they need to fire the CEO and fire most of the softies that are working there, they have no idea how serious the situation is, and I don't think they care. They'll take their paychecks and run Microsoft in to the ground without holding themselves responsible.
Meanwhile, back in reality MS posted a $101.8b Net Profit for their last full Financial Year.
More than 25X Tesla btw.
“If NVidia supported Bazzite why would people use Windows?”
MS makes the vast majority of its income from business clients, not dudes playing League of Legends in their stained underwear.
i know, but the main issue is microsoft massively increased cap-ex recently to pay for data centers and more, but do not have any returns to show for it (same problem with Grok to be honest)
that's why the stock is down, i've suffered the worst drop since the dot-com bubble burst
fair enough there are bright sides to possibly look forward to
cheers
(and bazzite is not for playing league of legends, you can do a lot more than that...., the main issue that is keeping windows in front is the full NVidia product stack and GPU support)
The AI situation is not going to work out, they will lose lots of money and people will be unhappy. Some will lose their jobs.
In the long run it’s irrelevant though as MS makes so much money from cloud computing and Saas. Yearly net profits in excess of $100b are absurd for any corporation. They will take any failures in their stride.
i agree, but not without firing some of their excess workforce
(also weird choice of game there, clearly you haven't used Bazzite, League of Legends doesn't work with Bazzite....)
Fuck Microshaft.
I know people will hate this but for a company that suppliers jobs for over 220k people, removing 2.5% including underpreforming staff is expected. MS continues to grow on employees, not shrink its numbers over the years.
There are 10 developers working on Bazzite. 165 more working on the more general Linux underpinnings and shared with other projects.
There are almost 100,000 developers at Microsoft working on Windows Core, Azure, Xbox and everything else.
Windows 95 was written by a core software engineering team of 200 developers. It's hard to understand what the other 99,000 people do at Microsoft today, because they are definitely not improving Windows.
Same thing with Mac OS btw which never fixes long running problems and barely improves at all.
