Microsoft Plans Thousands of Job Cuts, Affecting Less Than 2.5% of Workforce

Microsoft is preparing to cut around 5,500 jobs in another round of layoffs as it continues shifting billions of dollars towards artificial intelligence (AI), with the expected move also reigniting debate over the company's use of the H1-B visa programme.

According to the Business Insider, the company could announce the layoffs as early as next week. The planned cuts are expected to affect fewer than 2.5 per cent of Microsoft's global workforce. Based on its headcount of about 228,000 employees as of 30 June, that would amount to roughly 5,500 jobs.

The reductions are expected to span several business units, including sales, consulting and the Xbox gaming division. One person familiar with the plans told Business Insider that some affected employees could be offered alternative roles within Microsoft after the announcement.

The move follows previous rounds of job cuts. Microsoft laid off about 6,000 employees before announcing another reduction of roughly 9,000 jobs in July 2025, representing nearly 4 per cent of its workforce. This round is expected to be smaller after many eligible US employees accepted a voluntary retirement programme introduced earlier this year. The retirement scheme was offered to employees at level 67 and below who met the company's age and service requirements. Sales employees on commission-based pay were not eligible.

Microsoft has traditionally reviewed its workforce at the start of a new financial year. At the same time, it has continued to increase spending on AI and cloud infrastructure. The company invested more than $100 billion in AI and cloud projects during the 2026 financial year, with much of the spending directed towards AI chips and related infrastructure.

The Xbox division is also expected to undergo significant restructuring after years of heavy investment in gaming content, hardware and platforms. Earlier this year, Xbox Gaming CEO Asha Sharma told employees the business needed a "reset".

The expected job cuts have also revived criticism of Microsoft's continued hiring of foreign workers through the H1-B visa programme. One viral post on X claimed the company has remained among the six largest H-1B sponsors in US since 2020 despite reducing its domestic workforce.

The post read: "Microsoft has been the 6th largest H-1B filer in the country since 2020, bringing in foreign workers year after year even as it cuts American jobs. Just months ago, it pushed quiet buyouts on older US staff. About a third of the 9,000 eligible took the exit. This round lands on top of that. LinkedIn, which Microsoft owns outright, cut 875 jobs this year, about 5% of its staff, even as revenue grew 12% and they continued to file H-1B applications. Xbox takes the hardest hit. Under new CEO Asha Sharma's ‘reset,' its layoffs are reportedly to be the largest single layoff in gaming history. Record profits, and still one of the top H-1B sponsors in America. Thousands of American jobs, gone."

Meta has announced plans to cut about 10 per cent of its workforce this year, while Amazon has said it will eliminate around 16,000 jobs globally. Industry data also shows that technology companies in US have announced more than 123,000 job cuts in 2026, with growing investment in AI cited as a major reason behind many of the reductions.