Microsoft is cutting 4,800 jobs, about 2.1% of its global workforce, in another cost-reduction move as the company adapts to the artificial intelligence era. The Xbox gaming division will be hit hardest, losing about one-fifth of its employees.
Amy Coleman, Microsoft’s chief human resources officer and a 27-year veteran of the company, wrote to employees that “the pace of change in technology is faster than at any time since the company was founded.”
(Photo: AP\Ted S. Warren)
Coleman said AI was not replacing the employees being laid off, but stressed that it is changing how work is done and that employees must continue learning and developing new skills.
According to an internal email sent to employees by Xbox CEO Asha Sharma, the division will cut 3,200 jobs by fiscal year 2027, with 1,600 of them eliminated on Monday. Sharma wrote that she understood that “a restructuring spread over an entire year creates additional difficulties, but not all the necessary changes can be made in one day.” She said the division would return to growth in 2027.
Microsoft’s stock has been the weakest among the tech giants in 2026, falling 19% as of Friday’s market close, amid investor concerns that generative models could push aside large parts of enterprise software, while Microsoft’s own AI models and services have yet to become a major success.
The company’s cloud services and LinkedIn are showing accelerated growth, while areas such as Windows, Surface devices and Xbox are lagging behind, with revenue in those businesses declining.
As part of the changes announced Monday, four game studios will part ways with Microsoft. Compulsion Games and Double Fine Productions, acquired in the previous decade, will become independent again. Ninja Theory and Undead Labs, which joined the company in 2018, have “entered into agreements to join new ownership,” according to Sharma. The French studio Arkane, which came to Microsoft as part of its $8.1 billion acquisition of ZeniMax Media in 2021, is in talks with its workers’ committee regarding strategic options. The business unit responsible for customer sales will also face cuts.
In April, Microsoft first announced a voluntary retirement program aimed at U.S. employees at the senior manager level and below. More than one-third of eligible employees accepted the offer.
Dell layoffs reach Israel
At the same time, global layoffs at Dell have also reached Israel. Ynet has learned that several dozen development employees at the company’s Israeli operations received notices that their employment was being terminated. The company confirmed the move but declined to provide exact figures.
Unlike other tech giants that have recently carried out large and publicized rounds of layoffs, Dell had not until now carried out a significant broad layoff round in Israel. Dell employs about 1,000 people in Israel, a significant share of whom joined the company through its acquisition of EMC and other Israeli acquisitions over the years.
The employees are divided among four main sites: Herzliya, the company’s main development center; Beersheba; Haifa; and Or Yehuda. The Or Yehuda site houses Dell’s sales, service and business headquarters.