Square Enix-owned Hitman and Kane & Lynch: Dead Men developer IO Interactive last week laid off 35 employees, according to Danish reports.
The layoff report comes as the studio continues work on Kane & Lynch 2: Dog Days, due later this year.
"We are sorry to have to say goodbye to employees, but it is a natural process when working in a project[-based] organization," Niels Jorgensen, general manager at IO Interactive said on Danish website ComputerWorld.
The report said that prior to the layoffs, IO's headcount stood at 200 employees. Jorgensen acknowledged that the firings happened last Thursday, but would not corroborate the number of people fired. Gamasutra has contacted Square Enix to confirm.
IO Interactive was founded in 1998 and was acquired by Eidos in 2004. Square Enix then acquired Eidos in 2009.
IO Interactive's most successful franchise is the Hitman series, which was converted to a 2007 film starring a bald Timothy Olyphant.