Microsoft expected to lay off thousands in what has become an annual July restructuring

Microsoft is expected to announce another round of layoffs soon. Less than 2.5% of the company’s workforce will be affected, according to sources that spoke with Business Insider. Due Microsoft’s size, even that small percentage means thousands of people will be affected.

An SEC filing from June 30, 2025 showed Microsoft had about 228,000 employees. That figure has fluctuated since then, but it gives a gauge of the size of Microsoft’s full-time workforce.

Division cuts & AI infrastructure

This round of layoffs will affect thousands of roles across sales, consulting, and within the Xbox division. Microsoft is expected to announce the layoffs next week, though plans are subject to change.

July layoffs have become commonplace for Microsoft because the company’s fiscal year starts on July 1. Over 9,000 layoffs were made by Microsoft last July. Microsoft also lays off workers during other times of the year, such as the 6,000 layoffs made in May 2025.

Microsoft is one of many tech giants looking to reduce head count and lower expenses in certain areas. Increased AI spending and the rise of AI has affected jobs at several levels.

Voluntary retirements lowered the impact

This July will reportedly have fewer layoffs because several employees took voluntary retirement. Microsoft offered buyouts to employees level 67 and below in the United States who had 70 or more combined years of service and years of age (for example, someone who was 50 years old who had worked for Microsoft for 20 years).

Roughly 9,000 Microsoft employees were eligible for that buyout and around one third of those eligible took the buyout, according to Business Insider.

Xbox restructuring

Layoffs have been expected, and not simply because they’ve become an annual occurrence. Xbox CEO Asha Sharma is overseeing a restructuring of Xbox, much of which will occur within a 100-day reset.

As is the case with all layoff-related stories, I understand the business decisions that lead to layoffs but feel bad for the employees affected.