"I can confirm that we have made some internal changes at IO Interactive which has regrettably resulted in the loss of some jobs," a Square Enix representative told Shacknews. "This is a natural part of any studio's existence when you ramp-up and ramp-down on projects to ensure you have the right level of resource and expertise within the studio. We genuinely wish those who have been affected by this, the best of luck for the future."

Computerworld is reporting that the layoffs are the result of a canceled project with Microsoft. A new Hitman game was confirmed to be in development along with the then unreleased Kane & Lynch 2 back in May 2009.

The Square Enix-owned studio let go around 35 employees at the end of March, prior to Kane & Lynch 2's August release.

Square Enix did not respond to the report of a project cancellation or the status of the Hitman game. We'll update you if we hear any additional details.