Kane & Lynch studio IO Interactive is to let a number of staff go following the rumoured cancellation of an in-development project.
According to a report by Computerworld, around 30 staff have been made redundant after the collapse of a game deal with Microsoft.
IO Interactive is owned by Square Enix, following an acquisition by Eidos in 2004 for £23 million.
Earlier in the year the developer scaled back before the release of Kane & Lynch 2: Dog Days, blaming the natural ebb and flow of game development.
The latest round of cutbacks is again down to the nature of game development, general manager of IO Interactive Niels Jorgensen, told Computerworld.
"Like the movie business, we are very project oriented. And gaming companies adjusts up and down relative to where you are in the projects. It is quite common practice," he said.
The studio's most recent release, Kane & Lynch 2, scored a Metacritic average in the low 60s. The team is best known for the Hitman franchise and is rumoured to be working in the latest in the series, which last saw an update in 2006 with Hitman: Blood Money.