Because of its reliance on artificial intelligence, the Japanese company may have to significantly reduce its employee numbers.

According to VGC, Square Enix is cutting staff across nearly all areas of its Western offices, affecting employees in Europe and the United States. Sources say as many as 140 employees at the company’s London office alone have been told to prepare for redundancy. The news was shared on an internal video call as part of the restructuring outlined in Square Enix’s recent progress report, where the company stated it intends to use AI to handle 70% of quality assurance work by 2027. The overhaul of the overseas publishing organization aims to bolster global publishing capabilities and improve operational efficiency.

VGC’s report mirrors comments from Square Enix president Takashi Kiryu, who said the downsizing is intended to make the company leaner and more agile. The firm estimates annual savings of 3 billion yen. Beyond cost reductions, leadership says the goal is to bring development work closer to where teams live. The move is part of a broader push to strengthen development capacity at the group level and to optimize resource allocation to maximize value generated by IP, prompting an additional review of development processes. As a result, the company has decided to close overseas development studios and relocate development functions to Japan.

Square Enix isn’t the only Asian developer shifting away from far-flung subsidiaries. Shortly after the successful launch of Marvel Rivals, NetEase shut down its California office as part of a reorganization to bring development closer to its domestic studio. This week, NetEase also closed two more Western subsidiaries as it continues to limit its presence in the West. We recently reported on Bad Brain Game Studios, and the day before that, Fantastic Pixel Castle closed its doors.

Source: WCCFTech, VGC, Square Enix