Microsoft's 2025 Work Trend Index: AI Agents and the Rise of 'Frontier Firms'

AI is paving the way for a new type of organization - a Frontier Firm

As artificial intelligence (AI) evolves from a tool to a true assistant, its role in the workplace expands, fundamentally transforming how enterprises operate. Microsoft's latest research identifies a new type of organization known as the Frontier Firm, where on-demand intelligence requirements are managed by hybrid teams of AI agents and humans. Also: Will AI replace software engineers? It depends on who you ask On Wednesday, Microsoft published its 2025 Work Trend Index Annual Report, which combines survey data from 31,000 workers across 31 countries, Microsoft 365 productivity signals, LinkedIn hiring and labor trends, and expert insights to give employees and business leaders a comprehensive view of the work landscape. The focus of this year's report is the concept of a Frontier Firm, which helps researchers explore what work structure will be like in the AI era. As expected, the differences from today are vast. Yet, the report found that every organization will be on its journey to become a Frontier Firm in the next two to five years. Also: The best AI for coding in 2025 (and what not to use) "We went through this exercise as a team, where we were like, if we were starting today, this was the first day in the history of work, there was no history preceding it, how would we design work?" said Alexia Cambon, Future of Work Researcher at Microsoft. "We were surprised by how many assumptions we had about how work should be done." The report identifies three phases for an organization's transformation into a Frontier Firm. The first phase involves employees interacting with assistants to work more efficiently. In Phase 2, humans use AI agents, which function as more of a "digital colleague," carrying out tasks under human direction and freeing up their time. "The phase most of us are in right now is AI is showing up as an assistant at work," said Cambron. "But we definitely see the journey will get towards the Frontier Firm, where agents are a part of the workforce and are helping you do net new things, net new types of knowledge work, and those are two very different types of organizations." Also: Why OpenAI's new AI agent tools could change how you code The final phase (Phase 3) involves humans working with a team of AI agents, which can run entire business processes and workflows. According to the report, this evolution of AI into knowledge work will mimic how AI-enabled software development has progressed from general assistance in coding to chat interfaces and onto agents that can carry out the task on the user's behalf. The report identified real productivity gains from implementing AI into organizations, with one of the biggest being filling the capacity gap -- as many as 80% of the global workforce, both employees and leaders, report having too much work to do, but not enough time or energy to do it. Now, organizations can "buy intelligence on tap," which is made possible through AI agents that act as digital labor and help companies scale as needed, according to the report. The report found that 46% of leaders say their companies use agents to automate workflows or processes. The exact details of agent-human interaction will look different per function, with some tasks handled independently by agents and others requiring more human involvement. However, adding AI isn't enough, as the speed businesses evolve is outpacing the rate at which people work, with a larger shift needed to rethink knowledge-based tasks. Also: AI agents aren't just assistants: How they're changing the future of work today According to the report, business leaders need to separate knowledge workers from knowledge work, acknowledging that humans who can complete higher-level tasks, such as creativity and judgment, should not be stuck answering emails. Rather, in the same way working professionals say they send emails or create pivot tables, soon they will be able to say they create and manage agents -- and Frontier Firms are showing the potential possibilities of this approach. The report found that only 844 employees out of the 31,000-person sample worked at companies that met the five traits that comprise Frontier Firms: organization-wide AI deployment, advanced AI maturity, current agent use, projected agent use, and a belief that agents are key to realizing return on investment on AI. Out of these firms, 71% of workers reported that their company is thriving, compared to just 37% globally; 55% say they're able to take on more work compared to 20% globally; and 90% report they can do more meaningful work compared to 73% globally. These workers are also less likely, 21% compared to 38% globally, to fear AI will take their job. Beyond the positive outcomes from AI, there will be inevitable changes in the workforce's appearance and operation. Every industry will experience the transformation differently, with AI set to generate new jobs and replace others. Also: As AI agents multiply, IT becomes the new HR department Of the business leaders surveyed, 45% said expanding team capacity with digital labor is a top priority in the next 12 to 18 months. The top three areas for accelerated AI investment include customer service, marketing, and product development. Even after expanding their digital workforce, the researchers found that a key component enterprises need to consider to maximize benefits includes getting the human-agent ratio right. This concept refers to striking a balance between having too few agents per person and underutilizing their potential, or overwhelming the human capacity with too many agents per person. As an example of balance, the report cites a Harvard study that found that an individual with AI outperforms a team without the technology, but a team with AI outperforms everyone. Cambron said this trend highlighted how an organization will get better outcomes when it has a bigger team paired with AI, rather than using the technology to reduce the need for humans altogether. "I don't think we need to reduce headcount and replace it with AI. I think we need to maintain headcount and augment it with AI to get the best outcomes," said Cambron. Also: Will synthetic data derail generative AI's momentum or be the breakthrough we need? Another element of workplace change is seeing AI as a teammate rather than a tool, allowing the technology to take on higher-level tasks such as managing projects. However, 52% of respondents currently see AI as a command-based tool, and 46% see it as a thought partner. "We need to work towards having a more uniform understanding of how to use it, because if we're doing it like a search engine or a spreadsheet, it's not going to deliver the same return as if we start using it more as a digital colleague, where we're iterating and we're brainstorming together," said Cambron. Maximizing AI agents' performance involves learning about management concerns, including delegating, iterating, prompting, and refining the technology. The need for someone to manage these teams of AI agents has led to the evolution of a new role, the agent boss, responsible for the best performance. "Everyone will need to manage agents," said Cambron. "I think it's exciting to me to think that, you know, with agents, every early-career person will be able to experience management from day one, from their first job." Also: Employers want workers with AI skills, but what exactly does that mean? As a result in this shift of duties, the traditional organizational chart may also see some changes, being replaced by a Work Chart, which Microsoft describes as an "outcome-driven model where teams form around goals, not functions, powered by agents that expand employee scope and enable faster, more impactful ways of working." Microsoft compares this system of working to movie production sets in which tailored teams get together to perform the project and disband once the work is completed. In the same way, different AI agents will work together to meet a goal quickly and then shift onto a new project without having to reorganize actual employees. Humans with AI skills are also in demand, with 47% of business leaders listing upskilling their existing workforce as a top priority in the next 12 to 18 months, 51% of managers saying AI training or upskilling will become a key responsibility for their teams within five years, and 35% considering hiring AI trainers to guide employee adoption in the next 12 to 18 months. Although 33% of business leaders surveyed are considering a headcount reduction, Microsoft predicts new roles will evolve. Most business leaders, 78% for non-Frontier Firms and 95% for Frontier Firms, are considering hiring people for AI-specific roles, such as AI agent specialists and AI strategists in marketing, finance, customer support, and consulting, to prepare for the future. "We really see this new type of intelligence as additional, not substitutions," said Cambron. "I believe some jobs will go away, it's a natural order of events, but we absolutely believe we're not going to run out of work -- I think new jobs will be created, and current jobs will evolve."

You'll soon manage a team of AI agents, says Microsoft's Work Trend report

We'll all be working for 'Frontier Firms' soon, according to Microsoft. As artificial intelligence (AI) evolves from a tool to a true assistant, its role in the workplace expands, fundamentally transforming how enterprises operate. Microsoft's latest research identifies a new type of organization known as the Frontier Firm, where on-demand intelligence requirements are managed by hybrid teams of AI agents and humans. CNET: AI essentials: 27 ways to make AI work for you, according to our experts On Wednesday, Microsoft published its 2025 Work Trend Index Annual Report, which combines survey data from 31,000 workers across 31 countries, Microsoft 365 productivity signals, LinkedIn hiring and labor trends, and expert insights to give employees and business leaders a comprehensive view of the work landscape. The focus of this year's report is the concept of a Frontier Firm, which helps researchers explore what work structure will be like in the AI era. As expected, the differences from today are vast. Yet, the report found that every organization will be on its journey to become a Frontier Firm in the next two to five years. Also: The best AI for coding in 2025 (and what not to use) "We went through this exercise as a team, where we were like, if we were starting today, this was the first day in the history of work, there was no history preceding it, how would we design work?" said Alexia Cambon, Future of Work Researcher at Microsoft. "We were surprised by how many assumptions we had about how work should be done." The report identifies three phases for an organization's transformation into a Frontier Firm. The first phase involves employees interacting with assistants to work more efficiently. In Phase 2, humans use AI agents, which function as more of a "digital colleague," carrying out tasks under human direction and freeing up their time. "The phase most of us are in right now is AI is showing up as an assistant at work," said Cambron. "But we definitely see the journey will get towards the Frontier Firm, where agents are a part of the workforce and are helping you do net new things, net new types of knowledge work, and those are two very different types of organizations." Also: Why OpenAI's new AI agent tools could change how you code The final phase (Phase 3) involves humans working with a team of AI agents, which can run entire business processes and workflows. According to the report, this evolution of AI into knowledge work will mimic how AI-enabled software development has progressed from general assistance in coding to chat interfaces and onto agents that can carry out the task on the user's behalf. The report identified real productivity gains from implementing AI into organizations, with one of the biggest being filling the capacity gap -- as many as 80% of the global workforce, both employees and leaders, report having too much work to do, but not enough time or energy to do it. Now, organizations can "buy intelligence on tap," which is made possible through AI agents that act as digital labor and help companies scale as needed, according to the report. The report found that 46% of leaders say their companies use agents to automate workflows or processes. The exact details of agent-human interaction will look different per function, with some tasks handled independently by agents and others requiring more human involvement. However, adding AI isn't enough, as the speed businesses evolve is outpacing the rate at which people work, with a larger shift needed to rethink knowledge-based tasks. Also: AI agents aren't just assistants: How they're changing the future of work today According to the report, business leaders need to separate knowledge workers from knowledge work, acknowledging that humans who can complete higher-level tasks, such as creativity and judgment, should not be stuck answering emails. Rather, in the same way working professionals say they send emails or create pivot tables, soon they will be able to say they create and manage agents -- and Frontier Firms are showing the potential possibilities of this approach. The report found that only 844 employees out of the 31,000-person sample worked at companies that met the five traits that comprise Frontier Firms: organization-wide AI deployment, advanced AI maturity, current agent use, projected agent use, and a belief that agents are key to realizing return on investment on AI. Out of these firms, 71% of workers reported that their company is thriving, compared to just 37% globally; 55% say they're able to take on more work compared to 20% globally; and 90% report they can do more meaningful work compared to 73% globally. These workers are also less likely, 21% compared to 38% globally, to fear AI will take their job. Beyond the positive outcomes from AI, there will be inevitable changes in the workforce's appearance and operation. Every industry will experience the transformation differently, with AI set to generate new jobs and replace others. Also: As AI agents multiply, IT becomes the new HR department Of the business leaders surveyed, 45% said expanding team capacity with digital labor is a top priority in the next 12 to 18 months. The top three areas for accelerated AI investment include customer service, marketing, and product development. Even after expanding their digital workforce, the researchers found that a key component enterprises need to consider to maximize benefits includes getting the human-agent ratio right. This concept refers to striking a balance between having too few agents per person and underutilizing their potential, or overwhelming the human capacity with too many agents per person. As an example of balance, the report cites a Harvard study that found that an individual with AI outperforms a team without the technology, but a team with AI outperforms everyone. Cambron said this trend highlighted how an organization will get better outcomes when it has a bigger team paired with AI, rather than using the technology to reduce the need for humans altogether. "I don't think we need to reduce headcount and replace it with AI. I think we need to maintain headcount and augment it with AI to get the best outcomes," said Cambron. Also: Will synthetic data derail generative AI's momentum or be the breakthrough we need? Another element of workplace change is seeing AI as a teammate rather than a tool, allowing the technology to take on higher-level tasks such as managing projects. However, 52% of respondents currently see AI as a command-based tool, and 46% see it as a thought partner. "We need to work towards having a more uniform understanding of how to use it, because if we're doing it like a search engine or a spreadsheet, it's not going to deliver the same return as if we start using it more as a digital colleague, where we're iterating and we're brainstorming together," said Cambron. Maximizing AI agents' performance involves learning about management concerns, including delegating, iterating, prompting, and refining the technology. The need for someone to manage these teams of AI agents has led to the evolution of a new role, the agent boss, responsible for the best performance. "Everyone will need to manage agents," said Cambron. "I think it's exciting to me to think that, you know, with agents, every early-career person will be able to experience management from day one, from their first job." Also: Employers want workers with AI skills, but what exactly does that mean? As a result in this shift of duties, the traditional organizational chart may also see some changes, being replaced by a Work Chart, which Microsoft describes as an "outcome-driven model where teams form around goals, not functions, powered by agents that expand employee scope and enable faster, more impactful ways of working." Microsoft compares this system of working to movie production sets in which tailored teams get together to perform the project and disband once the work is completed. In the same way, different AI agents will work together to meet a goal quickly and then shift onto a new project without having to reorganize actual employees. Humans with AI skills are also in demand, with 47% of business leaders listing upskilling their existing workforce as a top priority in the next 12 to 18 months, 51% of managers saying AI training or upskilling will become a key responsibility for their teams within five years, and 35% considering hiring AI trainers to guide employee adoption in the next 12 to 18 months. Although 33% of business leaders surveyed are considering a headcount reduction, Microsoft predicts new roles will evolve. Most business leaders, 78% for non-Frontier Firms and 95% for Frontier Firms, are considering hiring people for AI-specific roles, such as AI agent specialists and AI strategists in marketing, finance, customer support, and consulting, to prepare for the future. "We really see this new type of intelligence as additional, not substitutions," said Cambron. "I believe some jobs will go away, it's a natural order of events, but we absolutely believe we're not going to run out of work -- I think new jobs will be created, and current jobs will evolve."

Microsoft just launched powerful AI 'agents' that could completely transform your workday -- and challenge Google's workplace dominance

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Microsoft announced today a major expansion of its artificial intelligence tools with the "Microsoft 365 Copilot Wave 2 Spring release," introducing new AI "agents" designed to function as digital colleagues that can perform complex workplace tasks through deep reasoning capabilities. In an exclusive interview, Aparna Chennapragada, Chief Product Officer of Experiences and Devices at Microsoft, told VentureBeat the company is building toward a vision where AI serves as more than just a tool -- becoming an integral collaborator in daily work. "We are around the corner from a big moment in the AI world," Chennapragada said. "It started out with all of the model advances, and everyone's been really excited about it and the intelligence abundance. Now it's about making sure that intelligence is available to all of the folks, especially at work." The announcement accompanies Microsoft's 2025 Work Trend Index, a comprehensive research report based on surveys of 31,000 workers across 31 countries, documenting the emergence of what Microsoft calls "Frontier Firms" -- organizations restructuring around AI-powered intelligence and human-agent collaboration. How Microsoft's new 'Researcher' and 'Analyst' agents bring deep reasoning to enterprise work At the center of Microsoft's vision are two new AI agents named Researcher and Analyst, powered by OpenAI's deep reasoning models. These agents are designed to handle complex research tasks and data analysis that previously required specialized human expertise. "Think of them as you know, like a really smart researcher and a data scientist in your pocket," Chennapragada explained. She described how the Researcher agent recently helped her prepare for a business review by connecting information across various sources. "I was using it to say, hey, I have an important business review coming up... pull all the past meetings, past emails, figure out the CRM data, and then say, 'Give me constructive, sharp inputs on how I should be able to push the ball forward for this meeting,'" she said. "Because of the deep reasoning, it actually made connections that I hadn't thought of." These agents will be available through a new "Agent Store," which will also feature agents from partners like Jira, Monday.com, and Miro, as well as custom agents built by organizations themselves. Beyond chat: How Copilot is becoming the 'browser for AI' in Microsoft's enterprise strategy Microsoft is positioning Copilot as a central organizing layer for AI interactions, similar to how web browsers organize internet content -- not just a chatbot interface. "I look at Copilot as the browser for the AI world," Chennapragada said. "In internet, we had websites, but we had the browser to organize the layer. For us, Copilot is this organizing layer, this browser for this AI world." This vision extends beyond simple text interactions. The company is introducing Copilot Notebooks, which allows users to ground AI interactions in specific collections of files and meeting notes. A new Copilot Search feature provides AI-powered enterprise search capabilities across multiple applications. "Today, most of AI, we have equated it to chat," Chennapragada noted. "Sometimes I feel like we're in the DOS pre-GUI era, where you have this amazing intelligence, and you're like, 'oh, we have an AOL dial-up modem stuck on top of it.'" To address this limitation, Microsoft is bringing OpenAI's GPT-4o AI image generation capabilities to business settings with a new Create feature, allowing employees to generate and modify brand-compliant images. Employee burnout and workplace interruptions: The 'capacity gap' driving Microsoft's AI focus Microsoft's research reveals a significant "Capacity Gap" -- 53% of leaders say productivity must increase, but 80% of the global workforce reports lacking the time or energy to do their work. The company's telemetry data shows employees face 275 interruptions per day from meetings, emails, or messages -- an interruption every two minutes during core work hours. "There's so much more pent-up, latent demand for work and productivity and output," Chennapragada said. "That statistic really stood out for me, that there's so much more pent-up, latent demand for work and productivity and output. So I see this as an augmentation, less of a job displacement." The research also indicates a shift in AI adoption patterns. While last year's adoption was largely employee-led, this year shows a more top-down approach, with 81% of business decision makers saying they want to rethink core strategy and operations with AI. "That's a shift between even last year, where it was much more bottom-up and employee-led," Chennapragada noted. "What that tells us is there needs to be a much more of a top-down AI strategy, but also AI products that you roll out in the enterprise with security, with compliance, with all of the guardrails." Rise of the 'agent boss': How Microsoft envisions employees managing digital workforces Microsoft predicts a fundamental restructuring of organizations around what it calls "Work Charts" -- more fluid, outcome-driven team structures powered by agents that expand employee capabilities. This reorganization will require determining the optimal "human-agent ratio" for different functions, a metric that will vary by task and team. The company expects every employee to become an "agent boss" -- someone who manages AI agents to amplify their impact. "For us at Microsoft, it's not enough if 2% of our customers' company adopts AI, it is really bringing the entire company along. That's when you get the full productivity gains," Chennapragada emphasized. The company's research shows leaders are currently ahead of employees in embracing this mindset, with 67% of leaders familiar with agents compared to just 40% of employees. To help organizations navigate this transition, Microsoft is enhancing its Copilot Control System with new capabilities that allow IT administrators to manage agents across the organization. "What happens if you have all of these [agents] running around? Our customers have been asking for it," Chennapragada said. "What we've built is a Copilot control system where IT admins can look and say, what's the compliance, what's the security, what's the data privacy, what agents are in the system? How do I actually manage them?" Research shows 'Frontier Firms' leading AI adoption outperform competitors by wide margins The business implications extend beyond productivity gains. Microsoft's research shows that 71% of workers at "Frontier Firms" -- organizations at the leading edge of AI adoption -- say their company is thriving, compared to just 37% globally. For small and medium businesses, the democratization of intelligence may level the playing field, allowing smaller teams to operate with capabilities once reserved for much larger organizations. While 33% of leaders are considering headcount reductions related to AI, 78% are also considering hiring for new AI-specific roles, including AI trainers, data specialists, security specialists, and AI agent specialists. LinkedIn data included in the research shows that the most prominent AI startups have grown headcount by 20.6% year-over-year -- nearly twice the pace of Big Tech companies at 10.6%. "As incumbents adapt and challengers scale, like we saw in the dot-com boom, the rules of talent and competition are being rewritten in real time," the company noted in its report. As Microsoft's new AI tools roll out beginning in late May, the stage is set for what Chennapragada calls "the browser for the AI world." Just as previous technological revolutions fundamentally changed how we work, the shift to human-agent teams promises to transform not just what work gets done -- but who, or what, does it.

Microsoft says AI is paving the way for a whole new kind of business - but it might still take time

But AI skills can also help boost job progression, Microsoft says Microsoft has revealed new research extolling the virtues of utilizing AI tools in the workplace, but admitted major progress may still be some way off. The company's annual Work Trend Index report, which interviewed around 31,000 people across 31 different countries, highlighted the work being done by "Frontier Firms" - essentially those businesses fully embracing AI in the workplace. It claimed 82% of industry leaders said AI is already revolutionizing work in their organization - leading them to have to rethink strategy and ways of doing business. "We are entering a new reality -- one in which AI can reason and solve problems in remarkable ways," Microsoft's Jared Spataro - CMO, AI at Work, said in a blog post accompanying the report. "This intelligence on tap will rewrite the rules of business and transform knowledge work as we know it. Like the Industrial Revolution and the internet era, this transformation will take decades to show its full promise -- and will bring broad technological, societal and economic change." "Frontier Firms" are understandably leading the way with the promise of AI, with the report claiming 71% of workers at these firms say their employer is "thriving" - compared to just 37% globally. Also understandably, AI is set to play a major role in improving various roles across the business, offering "a new lever for growth", Spataro noted. To satisfy the growing need for productivity increases, 82% of leaders expect to use digital labor to expand their workforce in the next 12 to 18 months, as human workers become overwhelmed with other tasks. This change is already in play, the report found, as nearly half (46%) of leaders said their organization is using agents to fully automate workstreams or business processes -- with customer service, marketing and product development as the top AI investment priorities. And as companies of all sizes trim workforces, AI itself seems to be a safe bet for employment, with over three-quarters 78% of bosses saying they are considering hiring for new AI roles - and 83% believing AI will enable employees to take on more complex and strategic work earlier in their careers. "2025 will be remembered as the year the Frontier Firm was born -- the moment companies moved beyond experimenting with AI and began rebuilding around it," Spataro concluded. "Like the digital native companies of a generation ago, they understand the power of pairing irreplaceable human insight with AI and agents to unlock outsized value. We're giving customers the insight to anticipate what's next -- and the technology to help shape it."

Microsoft report: 1 in 3 business leaders are considering replacing workers with AI

Microsoft's annual Work Trend Index report is here and, unsurprisingly, AI is the hot topic in the 2025 edition. The big takeaway: 1 in 3 business leaders say that they are considering layoffs as a result of AI deployment in their companies. According to the report, 33 percent of leaders are already "considering headcount reductions" because of AI. The new report also highlights how "frontier firms" are integrating AI into their workflow. Microsoft describes these frontier firms as companies "structured around on-demand intelligence and powered by 'hybrid' teams of humans + agents." "Frontier Firms are already taking shape, and within the next 2-5 years we expect that every organization will be on their journey to becoming one," says Microsoft. According to the report, 81 percent of business leaders say that AI agents will be "moderately or extensively integrated" into the company's strategy over the next year. Close to half of the business leaders surveyed in the report say that "expanding team capacity" with AI agents is a top priority. For some companies, the shift is underway now, with 46 percent of business leaders saying that their company uses AI agents "to fully automate workflows or processes." Another 24 percent of leaders say that AI is currently deployed throughout their company in some capacity. Microsoft's Work Index Report does stress the importance of the "human-agent team," highlighting that human workers are still needed. In addition, 78 percent of business leaders say that they are considering hiring for AI-specific roles. And on top of that, AI startups are hiring at "nearly twice the pace" of big tech companies, according to an analysis of LinkedIn data. To create the 2025 Work Trend Index report, Microsoft surveyed 31,000 workers around the world and factored in LinkedIn labor market trends.

Microsoft says everyone will be a boss in the future - of AI employees

Tech company predicts rise of 'frontier firms' - where a human worker directs AI agents to carry out tasks Microsoft has good news for anyone with corner office ambitions. In the future we're all going to be bosses - of AI employees. The tech company is predicting the rise of a new kind of business, called a "frontier firm", where ultimately a human worker directs autonomous artificial intelligence agents to carry out tasks. Everyone, according to Microsoft, will become an agent boss. "As agents increasingly join the workforce, we'll see the rise of the agent boss: someone who builds, delegates to and manages agents to amplify their impact and take control of their career in the age of AI," wrote Jared Spataro, a Microsoft executive, in a blog post this week. "From the boardroom to the frontline, every worker will need to think like the CEO of an agent-powered startup." Microsoft, a major backer of ChatGPT developer OpenAI, expects every organisation to be on their way to becoming a frontier firm within the next five years. It said these entities will be "markedly different" from those we know today and will be structured around what Microsoft calls "on-demand intelligence". "These companies scale rapidly, operate with agility, and generate value faster," the company said in its annual Work Trend Index report. It expects the emergence of the AI boss class to take place over three phases: first, every employee will have an AI assistant; then AI agents will join teams as "digital colleagues" taking on specific tasks; and finally humans will set directions for these agents, who go off on "business processes and workflows" with their bosses "checking in as needed". Microsoft said AI's impact on knowledge work - a catch-all term for a range of professions from scientists to academics and lawyers - will go the same way as software development, by evolving from coding assistance to agents carrying out tasks. Using the example of a worker's role in a supply chain, Microsoft said agents could handle end-to-end logistics while humans guide the system and manage relationships with suppliers. Microsoft has been pushing AI's deployment in the workplace through autonomous AI agents, or tools that can carry out tasks without human intervention. Last year it announced that early adopters of Microsoft's Copilot Studio product, which deploys bots, included the blue-chip consulting firm McKinsey, which is using agents to carry out tasks such as scheduling meetings with prospective clients. AI's impact on the modern workforce is one of the key economic and policy challenges produced by the technology's rapid advance. While Microsoft says AI will remove "drudge" work and increase productivity - a measure of economic effectiveness - experts also believe it could result in widespread job losses. This year, the UK government-backed International AI Safety report said "many people could lose their current jobs" if AI agents become highly capable. The International Monetary Fund has estimated 60% of jobs in advanced economies such as the US and UK are exposed to AI and half of these jobs may be negatively affected as a result. The Tony Blair Institute, which supports widespread introduction of AI across the private and public sectors, has said AI could displace up to 3m private sector jobs in the UK. However, job losses will ultimately number in the low hundreds of thousands because the technology will also produce new jobs, the institute estimates.

Microsoft says AI coworkers are coming fast

The company announced a major expansion of its AI tools on Wednesday, and Microsoft's 365 Copilot Wave 2 spring release featured AI "agents" designed to function as digital colleagues who can perform complex workplace tasks through deep reasoning capabilities. Aparna Chennapragada, Microsoft's chief product officer of experiences and devices, told VentureBeat that the company is building toward a vision where AI serves as more than just a tool -- and becomes an integral collaborator in daily work. According to an announcement by Microsoft, the features of Copilot Wave 2 include: The Agent Store will include "researcher" and "analyst." Microsoft billed them as: "Two first-of-their-kind reasoning agents for work powered by OpenAI's deep reasoning models. ... Researcher helps you tackle complex, multi-step research -- delivering insights with greater quality and accuracy than previously possible. And Analyst thinks like a skilled data scientist, so you can go from raw data to insights in minutes." The arrival of the "AI colleague" was heralded today in a report by Microsoft about the increasing role of AI in the workplace. "A new organizational blueprint is emerging, one that blends machine intelligence with human judgment, building systems that are AI-operated but human-led," the report said. "Like the Industrial Revolution and the internet era, this transformation will take decades to reach its full promise and involve broad technological, societal, and economic change." The report added, "We are entering a new reality -- one in which AI can reason and solve problems in remarkable ways." Microsoft calls this new workplace the "Firm Frontier." Chennapragada wrote on LinkedIn this week that people are still using AI for mundane, simple tasks when they could be using it to do more -- the equivalent of having AI make coffee runs when it could be playing a much greater role in the workplace. "We're experiencing an 'intelligence overhang' -- today's advanced AI models possess deep reasoning capabilities, approaching or even surpassing human PhD-level performance in certain domain," she wrote, "yet, we still assign these AI tools trivial tasks!" If Microsoft's tools are a success, you'll be gathering around the water cooler with your AI colleagues.

Microsoft thinks AI colleagues are coming soon

Artificial intelligence has rapidly started finding its place in the workplace, but this year will be remembered as the moment when companies pushed past simply experimenting with AI and started building around it, Microsoft said in a blog post accompanying its annual Work Trend Index report. As part of this shift, Microsoft is dubbing 2025 the year of the "Frontier Firm." "Like the digital native companies of a generation ago, they understand the power of pairing irreplaceable human insight with AI and agents to unlock outsized value," Jared Spataro, CMO of AI at Work at Microsoft, said in the post. These so-called Frontier Firms will be built around "on-demand intelligence and powered by 'hybrid' teams of humans + agents, these companies scale rapidly, operate with agility, and generate value faster," according to the report. Microsoft argued that within the next two to five years, every company will be on the journey to becoming one.