- Microsoft plans to lay off 4,800 employees, 2.1% of its global workforce
- Xbox led layoffs with 1,600 employees affected in the first tranche
- Severance packages range from 60 days to 39 weeks based on tenure and level
Microsoft on Monday (Jul 6) announced its plans to lay off around 4,800 employees, or 2.1 per cent of its global workforce. Asha Sharma-led Xbox copped the biggest hit, with 1,600 employees losing their jobs in the first tranche of layoffs. The laid-off employees in the US have been offered severance packages ranging from a minimum of 60 days to a maximum of 39 weeks of base pay, determined by their tenure and seniority.
Employees at internal levels 64 and below will receive one week of base pay per six months of service, while employees at levels 65 to 67 will receive two weeks of base pay per six months of service, according to documents accessed by Business Insider.
Meanwhile, employees at levels 68 and higher will receive a separate package. Eligible employees at level 67 and below will receive six to 12 months of continued stock vesting, determined by their years of service. This is paired with six months of company-paid health insurance, with the option to extend coverage for another 12 months via COBRA.
The layoffs come at a time when Microsoft is increasingly cutting costs and restructuring the business to build artificial intelligence (AI)-related infrastructure.
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Xbox Layoffs
The cuts mostly impacted the sales and Xbox gaming organisations. In an email to employees, Sharma informed them of the layoffs, highlighting that the business was 'not healthy'.
In addition, Sharma announced that Xbox will divest four of its gaming studios and is preparing to part ways with another.
"Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses," Sharma said in her email, which she posted on X, while noting that the layoff decision does not reflect the "talent and dedication" of employees.
Sharma laid out three ways that Xbox will reset itself - overhauling its content portfolio, platform and how the team operates.
"History is full of companies that mistake longevity for inevitability. We will not be one of them," she said, as she laid out the plan over the next few years.
The company, she said, has been losing 64 cents for every dollar it invested in a year. It now plans to "help independent creators succeed by providing open development tools and audiences."
