Xbox CEO Asha Sharma laid out a wide-ranging plan to overhaul Microsoft’s gaming division Monday, calling it the most significant restructuring in Xbox history and disclosing that the business has been losing 64 cents on every dollar invested in its game studios.
As detailed in a memo to employees, the changes include roughly 3,200 job cuts through the fiscal year — about 20% of the Xbox workforce — the spinoff of four game studios, a new COO, and a plan to flatten management from as many as 14 layers to no more than five.
“We will return to growth in 2027,” Sharma wrote. “History is full of companies that mistake longevity for inevitability. We will not be one of them.”
Sharma, a startup veteran and former Microsoft AI leader, was named Xbox CEO in February.
“I know this is painful,” she wrote. “These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved XBOX. Today’s decisions do not reflect their talent or dedication.”
But she also reiterated what she said in a memo last month: Xbox’s business is not healthy, operating at margins 3-10x lower than industry peers after years of heavy spending that failed to produce the expected growth.
About 1,600 of the Xbox job cuts take effect Monday as part of a broader round of 4,800 layoffs across Microsoft. The remaining Xbox reductions will come in the months ahead. Sharma acknowledged that a year-long restructuring “creates additional challenges” but said “it is not possible to make all the necessary changes in a single day.”
Sharma said the cuts reach across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, though no publicly announced games are being cancelled.
Several game studios will be spun out as standalone ventures, removing the costs from Microsoft’s books while giving the studios a chance to survive on their own.
Compulsion Games (South of Midnight) and Double Fine Productions (Psychonauts) will return to their management teams as independent studios, keeping their intellectual property and current projects.
Ninja Theory (Hellblade) and Undead Labs (State of Decay) will shift to new owners with funding to complete their current games.
In France, Arkane (Dishonored, Deathloop) is beginning a legally required consultation with its employee works council to determine its future.
Sharma will also take on direct oversight of game studios Mojang (Minecraft) and King (Candy Crush), Xbox’s two largest studios by monthly active players.
In addition, she is establishing a new chief operating officer role with end-to-end financial responsibility across content, hardware, platform, and services. Helen Chiang, a nearly two-decade Xbox veteran who led Mojang and the Minecraft franchise, has been promoted to the role. Dave McCarthy, a 17-year Xbox veteran who helped build the platform, is retiring.
Across the division, Sharma wrote in the memo, Xbox will cut vendor spending by 50% and reduce management layers from as many as 14 to no more than five.
The overhaul follows a 25-year period in which Microsoft largely subsidized Xbox as a strategic bet on the living room. Microsoft CEO Satya Nadella has said that era is over, noting that YouTube creators make more money from Xbox games than Microsoft does.
Xbox CEO Asha Sharma at the Bloomberg Tech conference in June 2026. | Bloomberg via Getty Images
Microsoft is laying off 4,800 employees today, and more than 30 percent of the job losses are in the company's Xbox division. The significant gaming cuts will affect nearly every part of Xbox and also involve four game studios being spun off to be run independently from Microsoft.
Today's layoffs, which are being described as an Xbox "reset" moment, will impact around 1,600 Xbox employees, according to an internal memo from Xbox CEO Asha Sharma. The cuts won't end today though, as Microsoft is planning to eliminate a total of around 20 percent of Xbox jobs by the end of the financial year in July 2027.
Microsoft is cutting 4,800 jobs, just over 2% of its global workforce, citing a need to revamp its sales and consulting division to keep pace with a rapidly changing tech industry, while overhauling its Xbox business in a push for long-term growth and profitability from gaming.
The cuts include about 600 jobs in Washington state, home to Microsoft’s Redmond headquarters. That’s down from 3,200 job reductions locally a year ago. Combined with ongoing hiring, Microsoft’s workforce in the state is expected to remain stable at around 52,000 people.
About 1,600 of the 4,800 job cuts being announced Monday are in the Xbox division. Additional Xbox layoffs in the months ahead are expected to bring total job reductions in the gaming division to roughly 3,200, or about 20% of the global Xbox workforce, this fiscal year.
Microsoft is also spinning off four Xbox game studios to operate independently.
In an internal memo, Xbox CEO Asha Sharma called it the biggest restructuring in Xbox history, saying the division has been “operating at margins that are 3-10x lower than comparable platform and publishing businesses” and that studios have been losing 64 cents for every dollar invested.
Overall, top executives sought to distinguish Microsoft from other tech giants, saying the cuts were minimized by the redeployment of more than 4,000 employees into new roles over the past year and a voluntary retirement program that let thousands more exit by their own choice.
By comparison, the company last year cut more than 15,000 jobs globally in two rounds of layoffs in spring and summer 2025 — the largest reductions in more than a decade.
The latest cuts come amid record capital spending on the company’s AI infrastructure, pressure from Wall Street to keep operating expenses in check, and a 30% stock slide that has wiped out roughly $1.2 trillion in Microsoft’s market value over the past nine months.
“Microsoft can only be a strong employer if it has a successful business,” said Brad Smith, its president and vice chair, in an interview with GeekWire. “We have to adapt to change.”
Before the latest cuts, the company’s total workforce was about 220,000 people. Across the company, Microsoft expects worldwide headcount to decline year-over-year, CFO Amy Hood said on an April earnings call.
Amy Coleman, Microsoft’s chief people officer, said in a memo to employees Monday morning that the roles the company is eliminating today are not being directly replaced by AI.
At the same time, she acknowledged, “AI is changing how work gets done.” She added, “Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves.”
However, the line from Coleman’s memo that may get the most attention internally is this: “We are still early on this journey, and there will be more changes ahead; other parts of our business will need to make similar changes.”
In an interview, Coleman stopped short of signaling further layoffs across the company. Instead, she described a larger shift in how Microsoft manages its workforce. That includes reskilling engineers for customer-facing and AI-focused positions, and exploring how to make voluntary exit programs a regular part of the company’s operations — not just a one-time offer, but potentially something employees could opt into annually or on an ongoing basis.
Coleman confirmed that about 30% of roughly 8,750 eligible U.S. employees accepted Microsoft’s first-ever voluntary retirement program in recent weeks, in line with the company’s expectations, which reduced the size of the reduction in force announced Monday.
The cutbacks and changes in the company’s sales and consulting teams build on last week’s launch of the Microsoft Frontier Company, a $2.5 billion initiative to embed 6,000 engineers inside customers to deploy AI. The shift is reducing some traditional sales and consulting roles and resulting in more technical positions working directly with customers.
“We’re seeing that we need more engineering excellence in the customer space,” she said.
Smith said software development is undergoing its biggest shift in the more than 50 years since Microsoft’s founding. The widespread use of AI is making code cheaper and faster to produce, but he said that’s also creating demand for new kinds of roles and work.
“Some things like coding require less time of software developers,” he said. “At the same time, there’s new parts that are growing, whether it’s the product management or software design, or perhaps most importantly, working directly with customers.”
Amy Coleman, EVP and Chief People Officer, shared the following communication with employees today.
When I stepped into this role, I promised to communicate more openly with you and share the “why” behind our decisions.
Today we are eliminating around 4,800 roles, about 2.1% of our global workforce, as we focus our people, investments, and energy on the priorities that will keep Microsoft positioned to deliver for customers in a fast-changing industry. The people whose jobs are impacted today are our colleagues and friends. They have made meaningful contributions to Microsoft, and we are deeply grateful for everything they have done.
Decisions like these are never easy, and you have my commitment that we are always looking for ways to reduce the need for job eliminations. Whenever possible, our priority is to place people into new roles aligned to the company’s highest priorities and greatest areas of opportunity. Over the past year, we have redeployed more than 4,000 employees into new roles, including another 500 this month. We will also transition four of our gaming studios to operate under new management, with the goal of preserving both their intellectual property and ongoing projects. In addition, more than 30% of eligible employees chose to participate in our recent voluntary retirement program, and we will continue exploring similar approaches in the future. While this doesn’t change the difficulty of today’s news, we will continue to do everything we can to create opportunities for our people, reduce the need for job eliminations where possible, and responsibly support those affected with care and respect.
The “why” is this: Our business is changing because the world around it is changing. The way technology is built, deployed, and used is transforming faster than at any point in my time here. Our customers’ needs are shifting, the business models that serve them are shifting, and that means the work itself – what we do, where we focus, and how we’re organized – has to transform too. Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it. That means we will need to adjust resources and roles and shift how we operate so we can have the greatest impact for our customers.
I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves. Our customers are navigating this same shift, and they’re counting on us to help them through it. We can’t do that well unless we’re doing it ourselves. This comes down to two commitments: making the decisions needed to drive differentiated customer value, and supporting the people affected by them.
First, we will make the hard changes required to build differentiated products and services that deliver differentiated customer value. We are aligning our investment, people, and energy to our business priorities. Today’s changes mostly fall within our Commercial and XBOX organizations. In our Microsoft Commercial Business, they build on last week’s Frontier Company announcement, reshaping how we work and embedding our engineering experts alongside customers so we can help them accelerate their technology deployments. In XBOX, we are restructuring to position the business for long-term success. Engineering teams across the company will also evolve their structure and priorities to meet customer needs and innovate for the future.
Second, we will do this thoughtfully. As mentioned above, we are working on alternative solutions to job eliminations, and beyond this, we will continue to invest in equipping employees with new skills, including in AI. For those who are impacted, we provide financial support and resources to help them take their next step.
I know many of you want to help those who are leaving but aren’t sure how. Reach out and check in on your colleagues. Use your network to bring people together, share what makes them exceptional, and help create connections to opportunities that might not happen otherwise.
We are still early on this journey, and there will be more changes ahead; other parts of our business will need to make similar changes. Each time, you can hold us to the two commitments.
During my time at Microsoft, I’ve seen this company reinvent itself again and again. What makes that possible has always been our people – their resilience, creativity, and willingness to keep learning.
“I work at Google” is a statement that carries prestige. It signals that someone operates in a strong engineering environment at a stable company, with a clear career structure and the opportunity to build products used by millions of people worldwide.
But what does that career structure actually look like?
To answer that, we explored publicly available discussions on platforms like Reddit and Dev.to, connected common patterns, and compiled a clear overview of the Google engineering ladder.
What the Google engineering ladder looks like
Public sources generally describe Google’s engineering levels like this:
Level
Role
General Interpretation
L3
Software Engineer II
Entry-level engineer
L4
Software Engineer III
Mid-level engineer
L5
Senior Software Engineer
Senior engineer
L6
Staff Software Engineer
Staff level
L7
Senior Staff Software Engineer
Senior Staff level
L8
Principal Engineer
Principal level
L9
Distinguished Engineer
Extremely high technical level
L10
Google Fellow
Elite and very rare level
L11
Senior Google Fellow
Highest IC level
At the early stages, engineers typically focus on learning, delivering well-scoped tasks, and becoming independent in familiar problem spaces. In contrast, at higher levels, the emphasis shifts toward technical strategy, cross-team collaboration, and creating impact that extends far beyond individual contributions.
Google rewards increased scope, greater leverage, and sustained impact over time
A common misconception is that more years of experience automatically lead to higher levels. However, reality is more nuanced. Instead, Google evaluates engineers based on scope, impact, and influence.
At lower levels, engineers are expected to:
Learn systems quickly and effectively
Deliver tasks with appropriate guidance
Collaborate closely with teammates
Build strong technical independence over time
As engineers progress to mid-level roles, expectations expand. They are expected to:
Lead complex projects from start to finish
Make sound technical decisions under uncertainty
Navigate ambiguous requirements
Take ownership of systems or features
Communicate effectively across teams and functions
Meanwhile, at higher levels, the focus shifts again. Engineers are expected to:
Influence multiple teams and stakeholders
Understand organizational and technical context broadly
Define or shape technical direction
Solve systemic rather than isolated problems
Multiply impact through others
Act as anchors for large-scale initiatives
Senior vs. staff
The transition from Senior to Staff is often considered one of the most significant jumps in the entire ladder.
A Senior Engineer typically:
Works independently on complex problems
Leads major features or components
Understands architecture and trade-offs
Mentors other engineers
Delivers impact primarily within a single team or domain
Senior Engineer is a strong individual contributor whose influence remains largely within a defined area.
However, a Staff Engineer operates differently.
A Staff Engineer:
Focuses on the broader system, not just one team
Connects multiple teams and initiatives
Identifies and resolves systemic issues
Drives cross-organizational projects
Aligns people, processes, and architecture
Produces impact that extends beyond direct output
Therefore, the shift is not about doing more work. Instead, it is about expanding influence and creating long-term, scalable impact across systems and teams.
Outcomes matter more than job titles
Google’s leveling decisions are usually shaped by three major factors.
1. Interview Performance
During interviews, candidates are evaluated on:
Technical depth
Problem-solving ability
Analytical thinking
Role-specific knowledge
Leadership signals
However, strong coding skills alone are not enough. Candidates must demonstrate they can think like engineers who design and maintain large-scale systems.
2. Previous Experience and Projects
Experience matters, but it is not the only factor.
More importantly, Google looks at:
What you actually delivered
The impact of your work
The complexity of your projects
Whether you led meaningful initiatives
Evidence of ownership and responsibility
3. Skill Set and Ability to Create Impact
In addition, Google values engineers who can:
Learn quickly in new environments
Make informed risk assessments
Operate effectively under ambiguity
Communicate clearly and consistently
Influence others through credibility and mentorship
Take responsibility beyond formal assignments
As a result, seniority reflects not only technical ability but also influence and leadership without authority.
How much do Google engineers earn?
Based on public reports, approximate annual compensation ranges often look like this:
Level
Role
Approx. Annual Compensation
L3
Junior Software Engineer
~$132,190
L4
Software Engineer III
~$158,399
L5
Senior Software Engineer
~$188,284
L6
Staff Software Engineer
~$232,219
L7
Senior Staff Software Engineer
~$266,100
L8
Principal Engineer
~$273,700
For L9 and above, public data is limited, and discussions tend to focus more on rarity and impact than exact numbers.
Overall compensation depends on several factors
It is important to remember that these figures are estimates based on public sources, not official salary disclosures. Actual compensation varies depending on:
Location
Level
Base salary
Bonuses
Equity (stock grants)
Performance
Team and product area
For this reason, professionals in Big Tech usually refer to total compensation (TC) rather than base salary alone.
What is above L6?
As engineers advance beyond Staff level, their responsibilities become increasingly strategic.
L7: Senior Staff
At this stage, engineers influence multiple teams and broader domains. Rather than solving isolated problems, they help shape how entire groups of teams operate.
L8: Principal Engineer
Principal Engineers define technical direction across large areas of the organization. This role requires long-term thinking, strong systems design skills, and the ability to align complex technical decisions.
Only a very small number of engineers reach these levels. Their influence can extend across:
Entire organizations
The company as a whole
The broader tech industry
At this stage, the focus shifts from implementation to shaping the future direction of large-scale systems and platforms.
What is Google Career Dreamer?
Google Career Dreamer is a career exploration and guidance tool designed to help users better understand their skills and career options.
It helps users:
Identify transferable skills
Define their professional identity
Explore potential career paths
Prepare for career transitions
Main Features
1. Career Identity Statement This feature helps users summarize their professional profile for use in resumes, LinkedIn, portfolios, and introductions.
2. Explore Career Possibilities It suggests roles aligned with a user’s experience and skills.
3. Relevant Jobs Near You Users can discover job opportunities that match both profile and location.
4. Gemini Support The tool also integrates AI support for:
Cover letters
Resume improvements
Career planning
In conclusion, the Google career ladder is not defined by a single dimension but by the scale of problems you solve, your influence across teams, your ability to handle ambiguity, your leadership without authority, and the multiplier effect of your work.
Google fires the engineer behind its Workspace CLI tool, OpenAI previews GPT-5.6 with three new model tiers, and Astro 7 lands with a full Rust rewrite. Plus: Coinbase cuts token costs with smarter routing, and more in this week’s Syntax Live
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