Washington. Microsoft is laying off about 9,000 workers, its second mass layoff in months and its largest in more than two years.

The company began sending out layoff notices Wednesday, hitting its Xbox video game business and other divisions. Among those affected are 830 workers tied to Microsoft's headquarters in Redmond, Washington, according to a notice sent to state officials.

Microsoft said the cuts will affect teams around the world, including its sales division, as part of “organizational changes” needed to compete in a “dynamic marketplace.” The company declined to confirm the exact number of layoffs but said the cuts amount to about 4 percent of the workforce it had a year ago.

In a memo to gaming division employees Wednesday, Xbox CEO Phil Spencer said the layoffs would position the video game business “for enduring success” and allow it to focus on “strategic growth areas.” Xbox will “follow Microsoft’s lead in removing layers of management to increase agility and effectiveness,” Spencer wrote.

Microsoft reported employing 228,000 full-time workers as of June 2024, the last time it disclosed its annual headcount. The latest layoffs would cut fewer than 4 percent of that workforce, or around 9,000 jobs, according to the company. Microsoft has already announced at least three rounds of layoffs this year, making it unlikely that new hiring has offset the reductions.

Previously, the company’s largest layoff this year was in May, when it cut about 6,000 workers, nearly 3 percent of its global workforce and its biggest reduction in more than two years.

The cutbacks come as Microsoft invests heavily in data centers, specialized chips, and infrastructure to advance its AI ambitions. The company anticipated that those expenses would total about $80 billion in its last fiscal year, which ended Monday.

Just last month, Microsoft cut another 300 workers based at its Redmond headquarters, on top of nearly 2,000 layoffs in the Puget Sound region in May, most of them in software engineering and product management, according to state filings.

On an April earnings call, Microsoft CFO Amy Hood said the company was focused on “building high-performing teams and increasing our agility by reducing layers with fewer managers.”

Microsoft has described the layoffs as part of a push to trim management layers. However, the company’s May cuts targeting software engineers fueled concerns that its AI code-writing tools could reduce the need for human programmers. CEO Satya Nadella said earlier this year that “maybe 20, 30 percent of the code” for some Microsoft projects is “probably all written by software.”

The latest layoffs appear centered on slower-growing parts of the business, said Wedbush Securities analyst Dan Ives.

“They’re focused more and more on AI, cloud, and next-generation Microsoft and really looking to cut costs around Xbox and some of the more legacy areas,” Ives said. “I think they overhired over the years. This is Nadella and team making sure they’re keeping with efficiency, and that’s the name of the game on Wall Street.”

The trimming of Xbox staff follows years of expansion around the gaming console business, including Microsoft’s $75.4 billion acquisition of Activision Blizzard in 2023. Before that, the company spent $7.5 billion to acquire ZeniMax Media, the parent company of Bethesda Softworks.

Many of those game studios across North America and Europe were grappling with layoffs Wednesday, according to social media posts from employees announcing they were looking for new jobs.

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