Microsoft is reportedly preparing to cut its workforce by less than 2.5%, with thousands of roles across several divisions expected to be affected.
Redundancies will include positions in sales and consulting, as well as staff in the Xbox gaming division, reported Business Insider, citing people familiar with the plans. These individuals requested anonymity as the plans have not yet been made public.
The job cuts are anticipated to be announced next week, though the decision on timing could change, those familiar with the matter said. Some employees whose roles are to be eliminated may be offered alternative positions straight away, according to one of the sources.
The scale of these reductions is expected to be smaller than Microsoft’s workforce cuts made last year.
In line with past practice, Microsoft often implements job cuts around the start of its fiscal year on 1 July. In 2025, the tech giant undertook two significant rounds of layoffs, eliminating 6,000 positions in May and a further 9,000 in July.
The July 2025 reduction represented about 4% of Microsoft’s total workforce at that time.
Earlier this year, Microsoft announced a voluntary retirement programme for US staff. The offer targeted employees at level 67 and below with a combined age and years of service of at least 70.
Around 7% of Microsoft’s 125,000-strong US workforce were eligible, representing nearly 9,000 people.
The latest redundancies follow as Microsoft continues its efforts to control operating costs, even as it reported higher revenues for its most recent financial quarter. For the quarter ended 31 March 2026 (Q3 FY26), Microsoft reported revenue of $82.9bn, an 18% increase on the $70bn recorded in the same quarter the previous year.
Operating income reached $38.4bn, up 20%, while net income was $31.8bn, representing a 23% rise year-on-year.
Microsoft Cloud revenues increased by 29% to $54.5bn, and the company’s commercial remaining performance obligation rose by 99% to $627bn.
Microsoft stated that its AI business achieved an annual revenue run rate of $37bn, up 123% compared with the previous year. In the Productivity and Business Processes segment, revenue was up 17%, including a $3.7bn, or 17%, increase in Microsoft 365 Commercial products and cloud services.
In May 2026, the UK Competition and Markets Authority (CMA) opened a strategic market status investigation into Microsoft’s business software ecosystem. The probe will examine whether Microsoft’s position affects customer choice and competition, looking in particular at practices such as product bundling and interoperability.
