Xbox Microsoft has no plans to replace thousands of U.S. employees affected by the latest move with outsourced workers from overseas, a senior Microsoft official said. The allegations are part of a wider rebuttal that has been circulating on social media since the company announced its latest workforce cuts at Xbox.
Xbox CEO Asha Sharma announced unprecedented cuts to Microsoft's gaming division on July 6. Framed as 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 fiscal year. Taken together, the staggering redundancies would mark the single largest round of layoffs in the history of the entire gaming industry. Shortly after the cuts were announced, social media was abuzz with claims that many American workers would be replaced by lower-cost freelancers overseas.
Microsoft rejected plans to replace Xbox employees with outsourced workers
In a July 10 post on X, Microsoft's chief communications officer Frank X. Shaw said the workforce cuts were aimed at restructuring the unhealthy Xbox business, not replacing domestic workers with foreign workers. Shaw said the H-1B figures cited in the allegations against Microsoft as a whole include applications for visa renewals and new hires, and represent a small portion of the technology giant's workforce.
The outsourcing allegations were accompanied by some racist attacks against Sharma, with a small but vocal subset of X users pointing to his Indian heritage and falsely portraying him as a foreign executive cutting American jobs. Shaw responded that Sharma was born, raised and educated in the United States, especially given his Wisconsin roots.
How many American jobs is Xbox really cutting?
Shaw also said that most of the locations affected by the Xbox restructuring were based outside the United States, while describing the gaming division as the industry's largest employer of US workers and its largest US-based company. The claim further challenged the outsourcing allegations, as overseas positions may not represent domestic jobs being transferred overseas. Microsoft has not released enough position-level data to independently compare each eliminated role with its H-1B applications, but no evidence has emerged that the two groups are matched on a position-for-position basis. However, 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 cut its gaming workforce since completing its acquisition of Activision Blizzard in October 2023, ending its half-decade-long studio buying spree. Previous cuts include layoffs affecting most of Activision Blizzard's customer service teams, contributing to broader concerns about how the company redistributes work by eliminating internal positions. The latest restructuring is a big one, but Microsoft says it's aimed at narrowing Xbox's priorities and streamlining operations rather than cutting overhead costs for short-term gains. As Sharma said, the ongoing FY2027 layoff is necessary because “our business is not healthy today.”
