Square Enix Europe has confirmed to GamesIndustry.biz that a number of staff at internal studio IO Interactive have been made redundant.
The team is currently working on Kane & Lynch 2: Dog Days, but is best known for the Hitman series, a title that prompted the Eidos group to buy the studio for £23 million back in 2004.
"Every studio has to take decisions to ensure it is operating effectively as projects start up and ramp down. IO Interactive has assessed the internal and external resources needed to support its pipeline and this has led to organisational changes which includes the loss of some roles at the studio," said a spokesperson for the company.
"We believe that this decision will make IO continue to deliver great games and add momentum to our operations. We would like to thank all employees affected, for their contribution and efforts and wish them well in their future careers."
Although the publisher has not named an exact figure, reports by Danish site Computerworld put the number of staff affected at 35 of the 200-man studio.
The most recent release from the studio was Mini Ninjas which scored a Metacritic rating in the mid-70s.