Microsoft, a leading technology company, has implemented significant layoffs in a restructuring move, impacting its gaming division the most. Approximately 3,200 employees are set to depart from Xbox during this fiscal year, with 1,600 already let go as of July 6.

Amy Coleman, Microsoft’s executive vice president, communicated in a staff memo that the company would be eliminating around 4,800 positions, representing about 2.1% of the global workforce. This decision aims to align resources to focus on key priorities essential for meeting customer needs in a rapidly evolving industry.

According to Coleman, the evolving business landscape necessitates these changes as the company adapts to the shifting environment. While roles are being eliminated without replacement by artificial intelligence (AI), the integration of AI is reshaping how tasks are carried out.

The restructuring primarily impacts Microsoft’s Commercial and Xbox divisions. Asha Sharma, the newly appointed chief of Xbox, described the global layoffs as the most substantial reorganization in Xbox’s history. She announced plans to reduce the team by around 3,200 throughout the fiscal year, including 1,600 job cuts already implemented, and the transfer of four studios to new management.

As part of the restructuring, four Xbox game development studios, namely Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs, will be spun off. Notably, in 2024, Xbox reduced 2,000 job roles, while Microsoft eliminated 9,000 positions last year following increased investments in AI.