Microsoft plans to cut under 2.5% of its workforce in a fresh round of layoffs

Microsoft is preparing to cut under 2.5% of its workforce in another round of layoffs, according to a Business Insider report picked up on Tuesday. The reductions could be announced as soon as next week, and they would affect thousands of roles across the company.

Sales and consulting teams are in the frame, alongside jobs in the Xbox gaming division, per the report. Microsoft did not immediately respond to a request for comment, and the plan has not been confirmed by an official filing or a company statement.

The scale matters here, because the headline figure has been easy to misread. This is a cut of fewer than 2.5% of staff, not 25%. The confusion comes straight from the decimal point. A stray reading of “under 2.5%” as “under 25%” would overstate the cuts tenfold, so the smaller number is the one that holds up across the reporting.

Microsoft counted roughly 228,000 full-time employees as of 30 June 2025, so a sub-2.5% reduction points to several thousand roles rather than a mass purge. Even at the smaller end, the number runs well into the low thousands.

It would also be a lighter round than the last big one. In July 2025, the company said it would lay off nearly 4% of its workforce, one of its largest cuts in recent years.

Xbox is once more near the centre of the story. The division has already raised console prices worldwide, citing a deepening global components crisis, and is now bracing for significant cuts to marketing and other budgets.

That fits a pattern our own reporting has tracked closely. Microsoft has spent much of 2026 reshaping the unit, and it has explored spinning Xbox off entirely as the division’s margins came under pressure.

Rather than shutting studios outright, the company has also weighed spinning off several of them, including Compulsion Games, Double Fine, and Ninja Theory. The direction of travel is a leaner gaming business.

None of this arrives in a vacuum. Microsoft has trimmed its headcount repeatedly over the past two years, and the pace has not really let up.

Earlier in 2026 the company put forward its first-ever voluntary retirement offer, a programme aimed at a slice of its US staff that critics read as a buyout dressed up as a benefit. It has also cut hundreds of Azure roles in China.

The backdrop is money flowing in one direction. Microsoft is pouring tens of billions into AI infrastructure, and payroll has become one of the levers it keeps pulling to fund that build-out.

Big Tech more broadly has spent 2026 converting salaries into capital expenditure on data centres and chips. Rivals including Meta and others have made similar moves, framing cuts as efficiency while boosting AI spend.

Microsoft has leaned on that same logic through repeated rounds this cycle. Copilot and AI agents are increasingly cited as the reason certain roles no longer need the same headcount.

What is different about this round is how it is being communicated, or rather not communicated. The plan surfaced through reporting rather than an official filing, and the exact number remains unconfirmed by the company.

The percentage looks modest against the 2025 cuts, yet the human total is not small. Fewer than 2.5% of 228,000 people still means a considerable number of jobs.

Microsoft has not published a formal figure, a timeline, or a division-by-division breakdown. Until it does, the numbers should be read as reported estimates rather than settled fact.

For staff in sales, consulting, and gaming, the wait is the hard part. A quiet week in early July could turn out to be anything but.