The dismissals motivated by AI investment will affect 7,000 employees.
In a decision reporting a significant strategic pivot, Microsoft announced today a reduction in his workforce by around 7,000 employees, which represents about three percent of its total workforce. Although such news often triggers concerns about automation and movement of jobs due to artificial intelligence, sources within the company indicate a different justification: this adjustment is a calculated step to optimize resources and ensure a continuous solid investment in the booming platform of Microsoft. The decision to rationalize certain operations (and to create an impact on the bottom) is designed to release capital to stimulate the company’s centered strategy. “We have made huge investments in AI because we are optimistic about what it can do to help people, industry and society, and because we are committed to gathering technology and people to make IA promises in a responsibility”, shares the company on its website.
Microsoft moving towards AI
Reuters reports that this investment in new AI initiatives, not the technology of the AI itself, which led the company to reduce its staff. However, CEO Satya Nadella told a Silicon Valley audience that “perhaps 20, 30% of the code that is within our references today, and some of our projects, are probably all written by Software.” In this same conversation, on stage with the meta-PDG Mark Zuckerberg, Nadella described his vision of Microsoft as a “distillation factory”, where they would take large models of AI for general purposes and reduce them into smaller, specialized and even specific models. Nadella has often talked about the “democratization of AI” and its plans for technology. Indeed, efforts are underway to target companies with tools and platforms fueled by AI, because the company integrates the capacities of AI into pillar products like Microsoft 365, Azure and Dynamics365.
And Wall Street responded positively. Microsoft’s raw beneficiary margins have always been in the range of 70% of the 60% of the 1960s in recent years, making action a favorite for institutional investors. Monday, Microsoft’s actions ended at $ 449.26, the highest price so far this year. (They closed a record of $ 467.56 last July). The company recently declared quarterly income of $ 70.07 billion, beating the expectations of Wall Street. By way of comparison, Nadella said that the company would spend $ 80 billion during the year 2025 for AI efforts.
No more to come to the coming for Microsoft?
Analyst Gil Luria says that the reduction in staff is a natural result of this type of capital investment figures, suggesting that more layoffs could be in advance. “We believe that every year, Microsoft is investing in current levels, it should reduce the workforce by at least 10,000 in order to compensate for the higher amortization levels due to their capital expenses,” said Luria, Reuters.
The displaced workforce includes approximately 1,985 workers in the state of Washington, where the company has its registered office. Overall, there are 228,000 workers in the company. The news of dismissal for these dismissed workers cannot be easy, as the tendency of technological dismissals continues.
