Artificial intelligence implemented by Microsoft occasioned savings worth half a billion dollars, leading to job losses for thousands.
Microsoft, one of the world's leading tech companies, has initiated its third round of layoffs this year, affecting more than 9,000 workers. This brings the total number of affected employees to approximately 15,000 during the current year.
The exact reasons for these layoffs are linked to a strategic shift driven by increasing investments in artificial intelligence (AI). As the company ramps up AI technology and automation, it is restructuring workforces, reducing traditional roles, and focusing on AI-driven innovation and cloud services. This reflects a broader trend in big tech companies optimising costs and operations in response to AI advancements and competitive pressures.
Despite the layoffs, Microsoft's financial performance remains strong. The company concluded its first quarter of the year with a profit of $26 billion and revenue of $70 billion. Its market capitalization has recently increased to approximately $3.74 trillion.
Microsoft's Chief Commercial Officer, Judson Althoff, announced that the company saved over $500 million in its call center last year through the use of AI tools. The savings were reported in a recent presentation by Microsoft, and a substantial portion of the company's profitability will be directed towards AI investments.
In a post on LinkedIn, Matt Turnbull, an Xbox Game Studios producer, suggested that AI tools like ChatGPT and Copilot could assist workers feeling "overwhelmed" by job loss, including those impacted by cuts within Xbox. However, the relationship between these layoffs and the integration of AI tools remains unclarified.
Turnbull's post was subsequently deleted, but his sentiment underscores the potential for AI to help those affected by job loss. Microsoft is now positioned behind Nvidia and has surpassed Apple, and the company is focusing on securing top AI researchers as part of its strategic emphasis.
Microsoft recently announced a plan to invest $80 billion into AI infrastructure throughout 2025. The announcement followed a series of internal remarks concerning productivity gains across sales, customer service, and software engineering. The layoffs coincide with Microsoft's reported financial performance, indicating that the company is making strategic adjustments to position itself for future success in the AI-driven tech landscape.
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