Microsoft has announced plans to cut about 4,800 jobs globally, representing approximately 2.1 per cent of its workforce, as part of a broader restructuring aimed at improving efficiency and competitiveness.
The layoffs include about 1,600 employees in the company's Xbox gaming division.
The company said additional job cuts are expected later this year as it continues efforts to reposition its gaming business.
According to an internal memo from Xbox Chief Executive Officer, Asha Sharma, the restructuring is intended to "reset" the business amid increasing competition in the gaming industry.
"Our business today is not healthy," Sharma said in the memo.
"We are operating at margins that are three to 10 times lower than comparable platform and publishing businesses."
She attributed the challenges facing the division to rising production costs and intense competition in the gaming hardware market.
According to Sharma, the gaming industry is currently experiencing a severe hardware crisis as the cost of components used in gaming consoles continues to rise.
Xbox competes with gaming platforms such as Sony's PlayStation and Nintendo's Switch.
The latest layoffs form part of Microsoft's broader strategy to streamline operations and strengthen the long-term sustainability of its gaming business.
