Microsoft is pushing back on claims that Xbox's latest layoffs are a plan to replace US employees with foreign workers, after accusations tied to H-1B visa filings spread across social media.
In a July 10 post on X, Microsoft chief communications officer Frank X. Shaw said the recent workforce reductions were made because Xbox's business needs restructuring, not because Microsoft intends to swap out American staff for overseas hires. Shaw also said the H-1B figures being cited online apply to Microsoft as a whole, not specifically to Xbox.
"Lots of bad information out there --let's clear it up. • Recent workforce changes were made to restructure the XBOX business because it is not healthy. They were not made to replace employees with foreign workers. • The H-1B figures being referenced are Microsoft-wide visa renewals and new hire applications. They are not specific to XBOX and represent a small percentage of Microsoft's overall workforce. And the majority of roles impacted were not American roles. • XBOX is the largest employer of American workers in the gaming industry and the largest American gaming company. • And Asha is an American born, raised, and educated CEO, from Wisconsin."
The statement follows a brutal week for Xbox. On July 6, CEO Asha Sharma told employees that Microsoft would cut about 3,200 Xbox roles across FY27, with 1,600 eliminations taking effect that day. IGN, which reviewed Sharma's internal email, reported that the plan also includes four studios leaving Xbox for new management, with Arkane entering consultation over strategic options under French labor rules.
Microsoft says the visa claims do not match the cuts
The H-1B allegations gained traction because they were attached to one of the largest gaming layoffs in recent memory. Microsoft has not published a role-by-role breakdown that would let outside observers independently map every eliminated Xbox job against the company's visa applications.
Shaw's response draws a firmer line around what Microsoft is denying. According to the company, the referenced visa numbers include renewals and new-hire applications across all of Microsoft, while most affected Xbox roles were not based in the US. That does not answer every question about which teams will absorb work after the cuts, but it rejects the central claim that the restructuring is designed to replace US Xbox staff with foreign workers.
The company is also defending Sharma after some of the criticism turned racist. Shaw said the Xbox CEO is "American born, raised, and educated" and is from Wisconsin. The clarification came after posts attacking her Indian heritage circulated alongside the outsourcing claims.
Xbox is still under pressure over the scale of the reset
Microsoft's denial does not soften the impact of the restructuring itself. Sharma's memo framed the cuts as the "most significant restructure in XBOX history" and said the gaming business was "not healthy." The email cited weak margins, a smaller Gen 9 install base, a higher cost structure and slower-than-expected growth from Game Pass, multiplatform releases and Xbox's wider content portfolio.
The cuts are part of a wider shake-up that has already left Xbox facing questions from developers, players and labor groups. Recent Gamers Now coverage has tracked Bethesda union plans to protest the Xbox layoffs, id Software's statement that it can still make Doom and John Carmack's criticism of Microsoft's stewardship after the reductions.
Shaw's post addresses one specific accusation, but the larger story remains Xbox's attempt to cut deeply while arguing it is narrowing priorities for long-term health. For employees and players watching the company's first-party studios, the unresolved question is how much of Xbox's future work will be handled by smaller internal teams, independent spinouts, external partners or new owners for studios leaving Microsoft.