The company's chief commercial officer recently touted Microsoft's big AI-related savings, according to a report
Matthias Balk/dpa (Photo by Matthias Balk/picture alliance via Getty Images
Microsoft $MSFT 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 $CRM says AI handles 30% of its internal work, allowing it to slow hiring in some areas. Alphabet $GOOGL and Meta $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.
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