Microsoft's Xbox cuts 1,600 employees, with plans to shed 20% of its workforce this year

Xbox CEO Asha SharmaBloomberg/Getty ImagesMicrosoft's Xbox plans to cut 3,200 employees, or about 20% of its workforce, this fiscal year.Microsoft announced plans to lay off around 4,800 employees on Monday.Of those, 1,600 come from Xbox layoffs and studio spinouts.

Microsoft's Xbox division plans to cut 20% of its workforce this fiscal year, according to a memo new Xbox CEO Asha Sharma sent to employees on Monday.Microsoft announced plans to lay off around 4,800 employees, or 2.1% of its global workforce, on Monday, confirming Business Insider's earlier report.

Xbox will account for 1,600 of Monday's cuts, including through studio spinouts, and the unit plans to a total of 3,200 employees throughout the current fiscal year ending in June. The total cuts will equal 20% of Xbox's workforce, according to a person familiar with the changes."Our business today is not healthy," Sharma wrote in the email.

"We are operating at margins that are 3—10x lower than comparable platform and publishing businesses."Xbox layoffs have been expected since new gaming CEO Asha Sharma sent a memo to employees calling for a "reset" of the business. Microsoft is also broadly cutting costs as it spends heavily in AI infrastructure.

Read the memo"Team,We are beginning the most significant restructure in XBOX history. After careful consideration, I've made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management.

I recognize that a year-long restructuring creates additional challenges. Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.I know this is painful.

These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry