Microsoft cuts 4,800 jobs. Its Chief People Officer says AI isn't to blame

Microsoft has sought to draw a clear distinction between artificial intelligence and its latest round of job cuts, with Chief People Officer Amy Coleman telling employees the company's decision to eliminate around 4,800 roles is rooted in business priorities rather than AI replacing workers.

According to an internal memo shared with employees and first reported by Moneycontrol, Coleman said the company is reshaping its workforce to align resources with long-term priorities as technology, customer expectations and business models continue to evolve.

Her comments come after Microsoft confirmed plans to cut around 2.1% of its global workforce, including a significant restructuring of its Xbox gaming business.

Microsoft says AI is transforming work, not replacing affected employees

Coleman sought to address speculation linking the latest layoffs to the rapid adoption of artificial intelligence across the technology industry.

"I also want to be direct that the roles eliminated today are not being replaced by AI," she wrote in the employee memo.

She added AI is changing how work is carried out, with some routine tasks becoming automated. Employees, she said, will need to continue learning new skills and adapt alongside evolving technologies so Microsoft can better support customers navigating the same transition.

Coleman said the company's approach rests on two priorities: delivering differentiated customer value while supporting employees affected by organisational changes.

Restructuring extends beyond Xbox

The latest restructuring affects multiple parts of Microsoft's business, although the largest impact falls on its Commercial and Xbox divisions.

According to ANI, the company will eliminate around 4,800 jobs, including approximately 3,200 positions within Xbox. Around 1,600 Xbox employees are expected to leave immediately as part of the restructuring.

The gaming overhaul follows years of heavy investment, including Microsoft's acquisition of Activision Blizzard. The company has also broadened its gaming strategy by bringing more titles to multiple platforms instead of relying primarily on console exclusives.

Company says business priorities are driving the changes

Coleman said the workforce reduction forms part of a broader effort to align Microsoft's people, investments and resources with future growth areas.

She told employees the company is responding to rapid changes in technology adoption, customer needs and business models.

"Companies don't get to choose whether their industry changes; they only get to choose whether they change with it," Coleman wrote, explaining the need to adjust roles, resources and organisational structures.

She also indicated the transformation is ongoing.

"We are still early on this journey, and there will be more changes ahead," Coleman said, adding other parts of Microsoft's business are expected to undergo similar organisational changes.

Microsoft highlights redeployment efforts

Alongside the layoffs, Microsoft said it has continued looking for alternatives to compulsory job losses by moving employees into new positions. Coleman disclosed several workforce measures already taken:

• More than 4,000 employees were redeployed into new roles over the past year.
• Another 500 employees were moved internally during the current month.
• Four gaming studios will transition to new management to preserve intellectual property and ongoing projects.
• More than 30% of eligible employees opted into Microsoft's recent voluntary retirement programme.

Coleman said the company will continue exploring similar measures wherever possible to reduce the need for future job eliminations.

Support and reskilling remain part of Microsoft's plan

Microsoft said it will continue investing in employee development, including AI-related skills, while providing financial assistance and career transition support to workers affected by the latest restructuring.

Coleman also encouraged remaining employees to support departing colleagues by helping them expand professional networks and connect with new employment opportunities.

The latest restructuring reflects how large technology companies are reshaping organisations to adapt to shifting market demands. While Microsoft acknowledges AI is changing the nature of work, its leadership maintains the latest layoffs are part of a wider business transformation rather than a direct consequence of automation replacing employees.