Microsoft Cuts 4,800 Jobs as AI Investment Reshapes the Company
By Suad Seferi ·
REDMOND — Microsoft has announced another major round of layoffs, cutting approximately 4,800 jobs, or around 2.1% of its global workforce, as the company continues restructuring while investing heavily in artificial intelligence. The reductions primarily affect Microsoft's commercial sales organization and its Xbox gaming division. The announcement comes at the beginning of Microsoft's new financial year and follows previous workforce reductions over the past year, highlighting how the company is reshaping its business around AI while streamlining operations elsewhere. Although the layoffs coincide with Microsoft's multi-billion-dollar AI investments, the company says the affected roles are not being directly replaced by artificial intelligence. Instead, executives describe the move as part of a broader organizational restructuring designed to adapt to a rapidly changing technology landscape. Xbox faces the biggest changes The largest impact is being felt inside Microsoft's gaming business. Around 1,600 employees from Xbox are leaving immediately, with additional restructuring expected throughout the fiscal year. Microsoft is also reorganizing parts of its gaming portfolio as it attempts to improve profitability in a business that has faced increasing pressure from higher hardware costs, slower console sales, and fierce competition. The restructuring marks another significant shift for Xbox, even after Microsoft's acquisition of Activision Blizzard and its continued expansion of Game Pass and cloud gaming services. AI investment remains Microsoft's priority Microsoft continues to spend aggressively on artificial intelligence infrastructure, including new data centers, AI chips, Copilot services, and cloud capacity supporting OpenAI-powered products. Across the technology industry, major companies are reallocating resources toward AI development while reducing spending in slower-growing business units. Microsoft is among the largest investors in this transition, with AI becoming central to nearly every part of its product strategy—from Windows and Microsoft 365 to Azure and GitHub. A broader trend across Big Tech The latest announcement reflects a broader pattern emerging across the technology sector. Rather than replacing employees with AI overnight, companies are redesigning their organizations around AI-first products, automation, and cloud infrastructure. This often means hiring in strategic AI roles while reducing headcount in areas where priorities have shifted. For businesses, developers, and policymakers, the message is becoming increasingly clear: AI is not simply introducing new tools—it is reshaping how some of the world's largest technology companies are organized. For the Western Balkans, the development is another reminder that AI's economic impact extends beyond innovation. As governments and businesses across the region invest in AI adoption, workforce transformation and reskilling are likely to become just as important as the technology itself.