Microsoft cut 4,800 employees in its latest round, about 2.1% of its workforce, with 1,600 of those jobs coming out of Xbox alone — over 30% of the total layoffs concentrated in a single division. It's not a one-time trim: Microsoft is planning to eliminate 20% of Xbox jobs by July 2027, and this follows a round of 9,100 cuts just a year earlier. Four studios — Double Fine, Compulsion Games, Ninja Theory, and Undead Labs — have been spun off, and Arkane Studios is reportedly facing possible sale or closure. The stated justification includes Xbox profit margins running 3 to 10 times lower than comparable companies in the industry.
Here's the part that doesn't square: Microsoft remains one of the top H-1B sponsors in the United States. This isn't a new pattern for the company. Reporting cited in Newsweek's coverage notes Microsoft hired over 1,000 new H-1B workers in 2022 while simultaneously cutting roughly 10,000 domestic positions. Zoom out further and the top 30 H-1B employers collectively hired more than 34,000 visa workers between 2022 and 2023 while laying off over 85,000 domestic employees in the same window. Microsoft has been part of that group, not an outlier to it.
Microsoft's own workforce composition makes the optics harder to explain away. As of June 30, 2025, the company employed 228,000 people globally, with 125,000 based in the U.S. — and 103,000 international employees, 45% of the total global workforce. Fiscal 2025 saw operations roles grow by 3,000 even as R&D, sales and marketing, and administration each shrank by 1,000. Growth is happening; it's just not obviously happening in the categories, or for the workers, getting laid off.
Immigration attorney Richard T. Herman put the tension plainly: "A company can legally lay off workers and still file H‑1B LCAs, but it doesn't make the optics easy to defend." That's a generous framing. Nothing in immigration law requires a company simultaneously running mass layoffs and new visa sponsorship — it's a choice, made repeatedly, by a company with the resources to do otherwise.
Microsoft is also rolling out its first-ever voluntary retirement program for U.S. employees, open to anyone whose age plus years of service adds up to 70 or more, covering about 7% of the U.S. workforce — and more than 30% of those eligible have already taken it. That's a lot of institutional knowledge walking out the door voluntarily, at the same moment the company is spending heavily on AI infrastructure and continuing to bring in visa-sponsored talent for the roles that remain.
The pattern across all of this — shrink the domestic workforce in the areas facing scrutiny, keep the H-1B pipeline running, point at AI investment as the future — isn't unique to Microsoft. But scale makes it visible in a way smaller companies can't match. When one of the most profitable companies in American history lays off thousands of workers in a single division while remaining a top visa sponsor, "legally defensible" and "good for American workers" are not the same claim, and Microsoft is not making the second one.
Read the original reporting at Newsweek.