Microsoft layoffs: Xbox CEO Asha Sharma’s email reveals 4,800 cuts

Microsoft layoffs: Xbox CEO Asha Sharma details 4,800 job cuts

In a terse internal memo, Asha Sharma, head of Xbox, announced the most extensive restructuring in the division’s history, citing a need to trim ↓ 20% of the workforce by fiscal 2027. The announcement follows a broader wave of Reuters-reported cuts across Microsoft’s commercial units.

Sharma confirmed that 1,600 positions are being eliminated today, part of a total of 3,200 roles slated for removal by July 2027, alongside the immediate departure of 4,800 employees company‑wide.

“We are resetting Xbox for sustainable growth,” Sharma wrote, adding that the changes “do not reflect the talent or dedication of those affected.”

The restructuring plan calls for a flatter hierarchy: management layers will be capped at five and, where feasible, reduced to three, down from as many as 14 in some units. The new model emphasizes makers, player‑coaches, and directly responsible individuals (DRIs).

Operational savings target a 50% reduction in vendor spend and a streamlined code base. A new chief operating officer, Helen Chiang, will assume end‑to‑end P&L responsibility for content, hardware, platform, and services.

Four studios—Compulsion Games, Double Fine, Ninja Theory, and Undead Labs—will transition to independent ownership, while Mojang and King now report directly to Sharma, reflecting their status as high‑traffic platforms.

Industry analysts note that the cuts mirror a post‑pandemic shift toward leaner structures as AI investment accelerates, though Sharma insists AI is not the direct cause of the layoffs.

Correction: An earlier dispatch misstated the fiscal year as 2026; the cuts extend through FY27.