Microsoft’s latest round of layoffs will affect around 4,800 employees, or about 2.1 per cent of its global workforce.
The Xbox division has reportedly taken the biggest hit, with around 1,600 employees losing their jobs in the first phase of cuts.
For laid-off employees in the US, Microsoft is said to be offering severance packages ranging from a minimum of 60 days to as much as 39 weeks of base pay, depending on seniority and length of service.
According to internal documents cited by Business Insider, employees at levels 64 and below will receive one week of base pay for every six months of service.
Those at levels 65 to 67 will reportedly receive two weeks of base pay for every six months worked.
Employees at level 68 and above are expected to receive a separate severance package.
Eligible employees at level 67 and below may also receive between six and 12 months of continued stock vesting, depending on their years of service.
In addition, Microsoft is reportedly offering six months of company-paid health insurance, with employees having the option to extend coverage for another 12 months through COBRA.
The layoffs come as Microsoft cuts costs and restructures parts of its business while pouring huge sums into artificial intelligence infrastructure.
The sales and Xbox gaming divisions are among the areas said to be most affected.
In an email to employees, Xbox chief Asha Sharma reportedly said the business was “not healthy” and warned that its margins were far below those of comparable platform and publishing businesses.
She also announced plans to divest four gaming studios and prepare to separate from another.
Sharma said the restructuring would focus on overhauling Xbox’s content portfolio, platform and internal operations.
“History is full of companies that mistake longevity for inevitability. We will not be one of them,” she said.
According to her, the business had been losing 64 cents for every dollar invested over the past year.
The latest cuts underline Microsoft’s aggressive effort to reshape its operations as AI spending rises and pressure grows to improve profitability.
