Xbox has no plans to replace thousands of U.S. employees affected by its latest round of layoffs with outsourced workers from overseas, a senior Microsoft official said. The statement formed part of a broader rebuttal to accusations that began circulating on social media after the company announced its latest workforce cuts at Xbox.
Xbox Chief Executive Officer Asha Sharma announced unprecedented layoffs across Microsoft’s gaming division on July 6. Framed as a key part of a much-needed restructuring, the cuts immediately affected about 1,600 employees, with another 1,600 positions expected to be eliminated by June 30, 2027, the end of the company’s current fiscal year. Taken together, the staggered redundancies will mark the single largest round of layoffs in the history of the entire gaming industry. Shortly after the cuts were announced, social media was flooded with claims that many laid-off U.S. employees would be replaced by lower-cost freelance workers based overseas.
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Microsoft Denies Plans To Replace Laid Off Xbox Employees with Outsourced Workers
In a July 10 post on X, Microsoft Chief Communications Officer Frank X. Shaw said the workforce reductions were intended to restructure what the company considers an unhealthy Xbox business, not to replace domestic employees with overseas workers. Shaw said the H-1B figures cited in the allegations applied to Microsoft as a whole, included both visa renewals and applications for new hires, and represented a small share of the technology giant’s workforce.
Image via GameRant
The outsourcing allegations were accompanied by some racist attacks against Sharma, with a small but vocal subset of X users pointing to her Indian heritage while falsely portraying her as a foreign executive cutting American jobs. Shaw responded by stressing that Sharma was born, raised, and educated in the United States, specifically noting her Wisconsin roots.
How Many American Jobs Is Xbox Really Cutting?
Shaw also said most of the positions affected by the Xbox restructuring were based outside the United States, while describing the gaming division as both the industry’s largest employer of American workers and its largest U.S.-based company. The claim further challenged the outsourcing allegations, as positions located abroad could not represent domestic jobs being moved overseas. Microsoft has not released enough position-level data to independently compare every eliminated role with its H-1B applications, but no evidence has emerged showing that the two groups correspond on a position-for-position basis. Even so, it remains unclear how many of the 3,200 redundancies resulting from the ongoing restructuring will affect Xbox workers in the United States.
Microsoft has repeatedly reduced its gaming workforce since completing the Activision Blizzard acquisition in October 2023, which marked the end of its half-a-decade-long studio shopping spree. Earlier cuts included layoffs affecting most of Activision Blizzard’s customer service teams, contributing to broader concerns about how the company redistributes work after eliminating internal positions. The latest restructuring is far larger, but Microsoft says it is intended to narrow Xbox’s priorities and streamline operations rather than cut overhead costs for short-term gains. As Sharma put it, the ongoing FY2027 layoffs are necessary because “our business today is not healthy.”
