Microsoft's AI Savings Soar to $500M Amid Job Cuts, Sparking Industry-Wide Debate

Microsoft shares $500M in AI savings internally days after cutting 9,000 jobs | TechCrunch

Microsoft's chief commercial officer Judson Althoff said during a presentation this week that AI tools are boosting productivity across sales, customer service, and software engineering, Bloomberg reports. Althoff noted AI has been so useful that Microsoft was able to save more than $500 million last year in its call center alone. The internal remarks come a week after Microsoft laid off more than 9,000 workers, the company's third round of layoffs this year that put the total number of affected employees somewhere around 15,000. For employees who lost their jobs while working at a company that is reporting impressive cost-savings and recording one of its most profitable quarters yet, Althoff's remarks might come off as tone deaf. The situation had already been complicated by a now-deleted LinkedIn post from Xbox Game Studios' producer Matt Turnbull, who last week suggested that workers feeling "overwhelmed" by Microsoft's layoffs - which included job cuts across Xbox - might find support through AI tools like ChatGPT and Copilot to help manage the cognitive load that comes with job loss. It's not clear whether the thousands of workers who lost their jobs this year were replaced by AI or whether the layoffs represent post-pandemic right-sizing. What is clear is that workforce adjustments during a period of record profitability creates a challenging dynamic that, for some, has to sting. Microsoft closed out the first quarter with $26 billion in profit and $70 billion in revenue. The company's market capitalization has also surged in recent months to around $3.74 trillion, displacing Apple and trailing only Nvidia. Microsoft has signaled that much of that profit will flow directly into AI. The company said in January it would invest $80 billion into AI infrastructure across 2025. While Microsoft continues to hire talent, too, the company appears positioned to more actively participate in the industry-wide competition of 'Who Can Pay Top AI Researchers The Most?' In short, it's more likely we'll see Microsoft spend millions of dollars on top AI researchers rather than middle managers and other employees.

Microsoft racks up over $500 million in AI savings while slashing jobs, Bloomberg News reports

July 9 (Reuters) - Microsoft (MSFT.O), opens new tab saved more than $500 million in its call centers alone last year by using artificial intelligence, Bloomberg News reported on Wednesday. The tech giant last week announced plans to lay off nearly 4% of its workforce as it looks to rein in costs amid hefty investments in AI infrastructure. In May, the company had announced layoffs affecting around 6,000 workers. AI tools were helping improve productivity in segments from sales and customer service to software engineering and the company has begun using AI to handle interactions with smaller customers, Microsoft's Chief Commercial Officer Judson Althoff said during a presentation this week, according to the Bloomberg News report. The nascent effort was already generating tens of millions of dollars, the report said, citing a person familiar with his comments. AI generated 35% of the code for new products, accelerating launch times, Althoff said, according to the report. Microsoft declined to comment when contacted by Reuters. The Windows maker has earmarked $80 billion in capital spending this fiscal year, with most of it aimed at expanding data centers to ease capacity bottlenecks for artificial-intelligence services. Big tech companies have been spending heavily on AI as they view the new technology as a major growth engine, while slashing costs elsewhere to safeguard profits. Reporting by Juby Babu in Mexico City; Editing by Pooja Desai Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Tech layoffs 2025: How Microsoft, Google, and Meta are plotting for the AI era

Six months into 2025, the tech industry has seen thousands of layoffs as giants such as Microsoft, Google, Meta, IBM, PwC, and Chegg Inc. make sweeping cuts. While AI replacing humans is often cited as the culprit, experts say the reality is more complex: these companies are freeing up capital to hire AI instead. It may seem like a neat distinction -- and will undoubtedly be cold comfort to those who lost their jobs -- but these experts say that these companies need the funds to make big bets on AI. In part, they're hiring a new workforce. The tech CEOs who are making the layoff decisions are largely offering a darker worldview, confirming that automation is coming for the white-collar workforce. Microsoft has been at the center of this year's layoff wave, letting go of nearly 6,000 employees in May, followed by another 9,000 in July -- amounting to almost 4% of its global workforce. CEO Satya Nadella has openly discussed the company's AI transformation, revealing that AI now writes 20% to 30% of Microsoft's code. This shift has sparked debate about the future need for human engineers, as the company reallocates resources to fund an $80 billion AI infrastructure push this year. Industry experts like Deedy Das of Menlo Ventures argue that the layoffs are less about AI replacing workers and more about freeing up capital for AI investments. Tech commentator Wes Roth echoed the sentiment: "This isn't about AI replacing humans yet -- it's about restructuring to fund AI initiatives." Microsoft's approach is mirrored across the sector, with companies including Amazon flattening management layers and prioritizing technical roles over administrative ones. Das and Roth did not respond to requests for comment. IBM has cut around 8,000 jobs in HR and other departments, as AI tools take over routine administrative tasks. However, the company is simultaneously hiring more engineers and salespeople, signaling a shift toward roles that require creativity and complex decision-making. Google and Meta have also made significant cuts, with Meta laying off 3,600 employees at the start of the year and Google reducing hundreds of roles in its Android, Pixel, and Chrome teams. Both companies cite the need to streamline operations and invest in AI as key reasons. As AI becomes more central to business operations, tech companies are redefining what productivity means. Tech CEOs and thought leaders have been outspoken this year about how AI is reshaping their sector with the unambiguous message that at least some jobs are being fundamentally displaced. There is still a debate about whether they are being eliminated for good. Meta's Mark Zuckerberg said AI could be ready this year to "effectively be a sort of mid-level engineer," capable of writing code. Andy Jassy said Amazon "will need fewer people doing some of the jobs that are being done today," while Ford's Jim Farley and Anthropic's Dario Amodei separately predicted that AI is set to displace essentially half of all white-collar positions. It's not all doomsday predictions. Bill Gates see an era of "free intelligence" coming as AI will become capable of handling most tasks. Nvidia's Jensen Huang said AI will "change everyone's job -- it's changed mine." The thousands of tech workers that have been laid off so far in 2025 are watching and waiting.

Microsoft hails AI as a money-saver while cutting jobs

Microsoft is making a pretty strong case for the power of artificial intelligence -- at least when it comes to saving money. During an internal presentation this week, chief commercial officer Judson Althoff told employees that AI tools helped the company save more than $500 million last year in its call centers alone, according to a Bloomberg report, which cited someone familiar with his remarks. But even with all those savings, Microsoft is still cutting jobs. Bloomberg also reported this week that the company plans to lay off up to 9,000 employees in July, a move that will affect a little less than 4% of its total workforce. A spokesperson said the cuts are part of "organizational changes necessary to best position the company and teams for success in a dynamic marketplace." This is Microsoft's second big round of layoffs this year. Back in May, the company axed about 6,000 people, mainly on product and engineering teams. In June, Microsoft filed notice that it would cut another 305 roles by August. These restructurings often come around this time, since Microsoft's fiscal year ends in June. At the end of June, the company had 228,000 full-time employees. Internal sources told Bloomberg that the latest cuts will target sales jobs, with layoffs expected early this month. All this comes as Microsoft's financial performance continues to soar. In its most recent quarter, the company reported $70.1 billion in revenue, up 13% year-over-year, and $25.8 billion in net income, up 18%. Its stock is up nearly 18% this year, fueled largely by AI and cloud growth. Althoff highlighted just how integrated AI has become at Microsoft. It's boosting productivity everywhere from sales and customer service to software engineering. AI now generates 35% of the code for new products, which means launches are happening faster. And GitHub Copilot, Microsoft's flagship AI coding assistant, had 15 million users as of April. Microsoft is also starting to use AI to handle interactions with smaller customers. That effort is still in its early stages, but it's already saving tens of millions of dollars, according to Althoff. Other tech giants are on the same path. Salesforce says AI handles 30% of its internal work, allowing it to slow hiring in some areas. Alphabet and Meta executives have also said large chunks of their code are now being written with AI. Still, Microsoft's employees are feeling uneasy, Bloomberg reports. Althoff tried to reassure them, saying AI tools like Copilot aren't here to replace them but to make them better at their jobs. He said salespeople using Copilot are finding more leads, closing deals faster, and generating 9% more revenue.

Microsoft Lays Off Staff as Savings From AI Top $500 Million | PYMNTS.com

According to Bloomberg, Chief Commercial Officer Judson Althoff told employees in a recent presentation that AI is enhancing productivity across functions, including sales, customer service and software development, according to a person familiar with his remarks. AI helped Microsoft save more than $500 million last year in its call centers alone and improved both employee and customer satisfaction, the person said. The company is also using AI to manage interactions with smaller clients -- an initiative that is still early-stage but already generating tens of millions of dollars in revenue, according to the same person. Read more: Microsoft's Nadella: AI Agents Serve as 'Chiefs of Staff' At the same time, Microsoft has announced job cuts of about 15,000 so far this year, with the latest round affecting customer-facing roles such as sales. The layoffs have raised concerns about AI displacing workers -- a trend echoed across the technology sector. Salesforce has relegated 30% of its internal work to AI, enabling it to reduce hiring for some positions. Tech isn't the only industry facing the potential impact of AI in the workplace. Ford, JPMorgan and other companies have warned of the possibility of deep job cuts as AI continues to advance. Read more: Microsoft to Cut 3% of Workforce While Reducing Management Layers Althoff said Microsoft's AI tools, including its Copilot assistant, could make them more effective salespeople. He said each seller is finding more leads, closing deals quicker and generating 9% more revenue with Copilot's help. Microsoft said in April that its GitHub Copilot has 15 million users and noted that AI now generates 35% of the code for new products, helping speed up development. Other technology companies are making similar moves: Executives at Alphabet and Meta have noted that AI is now responsible for writing substantial amounts of code.

Microsoft says slashing jobs and using AI helped it save $500M: report

Microsoft saved more than $500 million in its call centers alone last year by using artificial intelligence, Bloomberg News reported Wednesday. The tech giant last week announced plans to lay off nearly 4% of its workforce as it looks to rein in costs amid hefty investments in AI infrastructure. In May, the company had announced layoffs affecting around 6,000 workers. AI tools were helping improve productivity in segments from sales and customer service to software engineering and the company has begun using AI to handle interactions with smaller customers, Microsoft's Chief Commercial Officer Judson Althoff said during a presentation this week, according to the Bloomberg News report. The nascent effort was already generating tens of millions of dollars, the report said, citing a person familiar with his comments. AI generated 35% of the code for new products, accelerating launch times, Althoff said, according to the report. Microsoft did not immediately respond to a Reuters request for comment. The Windows maker has earmarked $80 billion in capital spending this fiscal year, with most of it aimed at expanding data centers to ease capacity bottlenecks for artificial-intelligence services. Big tech companies have been spending heavily on AI as they view the new technology as a major growth engine, while slashing costs elsewhere to safeguard profits.

Will Microsoft Job Cuts Pay Off in the Long Run?

The long-term success depends on AI adoption, workforce adaptation, and execution. Microsoft, one of the world's largest tech companies, is currently undergoing a major transformation. The tech giant announced job cuts affecting over 15,000 employees across several divisions. These layoffs come at a time when the company is investing heavily in artificial intelligence (AI), reshaping how it operates and where it directs its resources. While some see this as a smart long-term strategy, others question whether cutting jobs so drastically is the right path. This article explores the reasons behind Microsoft's decision, its connection to AI, and whether this move will bring long-term benefits. Microsoft fired over 15,000 employees in 2025. The layoffs occur in two significant waves, with roughly 6,000 positions cut in May and another 9,000 in early July. This totals up to approximately 7% of its worldwide staff. These are not random or small-scale redundancies. They represent a huge, strategic realignment of how Microsoft wishes to conduct its business. Microsoft is not financially strapped. The firm is profitable and expanding. It's not about cutting expenses in the near term with these layoffs. It's about structuring the workforce to align with a new vision, one in which AI has a much greater role to play in how Microsoft works. Construct vast data centers and AI infrastructure for future expansion This is part of a larger strategy to position the company for the of software, cloud computing, and digital services. Microsoft has a strong commitment to AI. It already employs AI tools across much of its business. For instance: AI assists in producing roughly 35% of the company's software code, accelerating development and efficiency. AI in call centers and support operations is also saving Microsoft more than $500 million annually. Workers are also being taught to leverage tools such as Copilot, which makes it easier for them to do tasks more efficiently with AI. With these benefits, Microsoft is saving itself from depending on human effort for everyday tasks. Rather, it concentrates on the recruitment of talent that can develop, oversee, and optimize AI systems. Restructuring impacts not only the size of the workforce but also how employees work. Microsoft's sales function is now structured around three key areas: Sales jobs are increasingly analytical, working with data and insights from AI instead of more conventional sales approaches. This enables Microsoft to react quicker to customer requirements and spot business opportunities better. Within the engineering team, developers are no longer coding. They are now managing AI models that code by themselves. The work of an engineer is changing from a labor-intensive task to a task aimed at directing and perfecting AI performance. Performance appraisal also indicates this change. Workers are required to demonstrate how well they employ AI tools in their day-to-day activities. Also Read - Is it a Good Time to Buy Microsoft Stock? Microsoft will be investing approximately $80 billion in AI infrastructure during the current year. This covers the development of additional Azure data centers, hardware upgrades, and new AI features across products. The cost savings from job reductions are being used to support this significant investment. By reducing labor expenses, Microsoft is not compromising its profit margins, despite increased spending on AI development. This plan is designed for long-term development. Microsoft is confident that AI will lead to more powerful and cost-effective services that attract businesses and individual consumers. The stock market to Microsoft's reduction of staff. Investors view it as an indicator that the company is committed to becoming more efficient and ready for the future. Even after the layoff, Microsoft's stock is stable and continues to do well. Within the company itself, though, the response is divided. Some workers are concerned for their jobs and question the direction of the company. Others welcome the change as something that must be done and the opportunity to have the latest AI tools to work with. There is also fear that might hurt morale, collaboration, and innovation, particularly if skilled employees leave the company. There are benefits and risks to Microsoft's strategy. Benefits: By investing in AI early, Microsoft can get a competitive edge. Automation enhances efficiency, reduces costs, and accelerates product development. A smaller team that is more focused can create quicker decisions and innovation. Risks: When AI tools fail to deliver, productivity may be impacted. Skilled employees can feel devalued and opt to exit. Solemn criticism of sweeping layoffs could bruise Microsoft's image. The actual result will be determined by Microsoft's performance in its AI strategy, the speed at which it introduces new products, and the efficiency with which its remaining employees adapt to the transition. The next couple of quarters will be decisive. Investors and analysts will consider: If Microsoft's revenue from grows. How effective tools like Copilot are when used in practical contexts. Employee retention rates and satisfaction levels. Microsoft's quarterly reports of earnings, product releases, and user take-up rates of AI products will provide stark evidence of the success of this change. Microsoft's layoffs in 2025 are more than just a budgetary move. They are part of a profound transformation. The company is reorganizing its operations based on artificial intelligence, rebalancing resources away from legacy roles to focus on high-tech infrastructure and innovation. Also Read - This can result in improved performance and sustainable growth if AI yields the anticipated dividends. But it is also fraught with concrete challenges, such as the loss of talent and disruption of culture. Microsoft is staking its future on AI. The company is making sure it's prepared to lead the future. Only time will indicate if this risk pays off, but for the time being, the company seems concentrated, assured, and totally devoted to its AI vision.

Microsoft racks up over $500 million in AI savings while slashing jobs, Bloomberg News reports

(Reuters) -Microsoft saved more than $500 million in its call centers alone last year by using artificial intelligence, Bloomberg News reported on Wednesday. The tech giant last week announced plans to lay off nearly 4% of its workforce as it looks to rein in costs amid hefty investments in AI infrastructure. In May, the company had announced layoffs affecting around 6,000 workers. AI tools were helping improve productivity in segments from sales and customer service to software engineering and the company has begun using AI to handle interactions with smaller customers, Microsoft's Chief Commercial Officer Judson Althoff said during a presentation this week, according to the Bloomberg News report. The nascent effort was already generating tens of millions of dollars, the report said, citing a person familiar with his comments. AI generated 35% of the code for new products, accelerating launch times, Althoff said, according to the report. Microsoft declined to comment when contacted by Reuters. The Windows maker has earmarked $80 billion in capital spending this fiscal year, with most of it aimed at expanding data centers to ease capacity bottlenecks for artificial-intelligence services. Big tech companies have been spending heavily on AI as they view the new technology as a major growth engine, while slashing costs elsewhere to safeguard profits. (Reporting by Juby Babu in Mexico City; Editing by Pooja Desai)