Tech giant Microsoft swings axe on 4800 jobs
Microsoft has cut 4800 jobs across its global workforce, but has insisted the roles will not be replaced by AI.
The company’s video game division will be hit hard, with XBOX set to axe 1600 staff alone today, while looking to cut 3200 throughout the next financial year.
The latest round of cuts mean the company has cut 13,800 jobs in the last 12 months. AP
In a message to employees that was also shared publicly by the company, EVP and Chief People Officer Amy Coleman said decisions to cut staff are “never easy”, but said customers’ needs and business models made it necessary for the company to pivot.
“We [will] focus our people, investments, and energy on the priorities that will keep Microsoft positioned to deliver for customers in a fast-changing industry,” she said,
“Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it.
“That means we will need to adjust resources and roles and shift how we operate so we can have the greatest impact for our customers.”
Amy Coleman insisted AI would not be replacing the jobs, but said it would still be apart of the business going forward. Peter Rae
However, she was adamant the roles would not be replaced by AI, even though she said the company would train its current employees in how to use the technology in their current roles.
“I also want to be direct that the roles eliminated today are not being replaced by AI,” she said.
“At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves.”
She added that 4000 employees had been redeployed, and that 30 per cent of eligible employees had taken voluntary retirement in a program offered earlier this year.
The cuts come just a year after the company cut 9000 workers, amounting to four per cent of its workforce.
Microsoft has faced pressure to establish itself as a major player in artificial intelligence while companies like Anthropic and OpenAI increasingly tailor their AI tools for business use and productivity.
The staff in Microsoft's Xbox team will be slashed over the next year. Jae C. Hong
Microsoft, like other cloud companies, has also poured billions into AI infrastructure in recent years and is combating concerns over whether it can generate significant returns on those investments.
Coleman said the company’s XBOX organisation would be hit hard by the changes, with XBOX CEO Asha Shar saying the company was beginning its “most significant restructure in XBOX history.”
“Our business today is not healthy. We are operating at margins that are 3–10x lower than comparable platform and publishing businesses,” she said in an email to staff that she also shared to X.
She said a bet on a “broader portfolio of content” and their Game Pass subscription service hadn’t grown “at the pace we expected”.
“As that happened, our core business weakened… And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX.”
The Xbox layoffs also come following a slowdown in video game spending after the pandemic.
While the industry has largely recovered from that slump, according to reports from Boston Consulting Group and Bain & Company, console makers are grappling with an ongoing memory shortage that has forced them to raise the prices of their products.
Microsoft did not confirm how many of the job losses would impact Australia when contacted by Nine.com.au.
It is understood there are around 3000 Microsoft employees in Australia.
Reported with CNN
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