xbox A senior Microsoft official said the company has no plans to replace the thousands of U.S. employees affected by recent layoffs with workers outsourced overseas. The statement formed part of a broader rebuttal to criticism that began spreading on social media after the company recently announced job cuts at Xbox.
Xbox CEO Asha Sharma announced unprecedented layoffs across Microsoft's gaming division on July 6. The layoffs, which form a key part of a much-needed restructuring, immediately affected approximately 1,600 employees, with an additional 1,600 positions expected to be eliminated by the end of the company's current fiscal year on June 30, 2027. Taken together, the staggered layoffs will be the largest in the history of the entire gaming industry. Immediately after the cuts were announced, social media was flooded with claims that many of the laid-off American employees would be replaced by low-paid freelance workers based overseas.
Microsoft has rejected plans to replace laid-off Xbox employees with outsourced workers.
In a July 10 post to X, Microsoft Chief Communications Officer Frank Shaw said the H-1B figures cited in the charges applied to Microsoft overall include both visa renewals and new job applications and represent a small portion of the tech giant's workforce.
The outsourcing allegations were accompanied by some racist attacks against Sharma, with a small but vocal portion of Shaw responded by emphasizing that Sharma was born, raised and educated in the United States, and specifically mentioning her Wisconsin roots.
How many American jobs is Xbox really cutting?
Shaw also said most of the positions affected by the Xbox restructuring are based outside the U.S., describing the gaming division as the industry's largest employer of American workers and the largest U.S.-based company. This argument further challenged the outsourcing argument as positions located overseas cannot represent the transfer of domestic jobs overseas. Microsoft did not disclose enough position-level data to independently compare all eliminated roles with H-1B applications, but no evidence emerged that the two groups were matched by position. Still, it's unclear how many of the 3,200 layoffs due to the ongoing restructuring will affect Xbox employees in the United States.
Microsoft has repeatedly cut its gaming workforce since completing its acquisition of Activision Blizzard in October 2023, ending a five-year studio shopping spree. Previous cuts have included layoffs affecting much of Activision Blizzard's customer service team, raising widespread concerns about how the company will redistribute work after eliminating internal positions. The latest restructuring is much larger, but Microsoft says it is aimed at narrowing Xbox's priorities and streamlining operations rather than cutting overhead for short-term profits. Ongoing FY2027 layoffs are necessary because, as Sharma said, “our business is currently not healthy.”
