Microsoft Simply Fired About 9,000 Individuals Whereas Making Billions

Microsoft is shedding 1000’s of workers, at the same time as its earnings and inventory worth hit historic highs. For a lot of apprehensive about the way forward for work within the age of synthetic intelligence, the message is chilling: efficiency and profitability are not protections towards the axe.

The software program big, which is enjoying a central position within the generative AI growth, confirmed to Gizmodo on Wednesday that it’s present process one other main spherical of layoffs. Whereas Microsoft didn’t present a precise determine, solely saying it’s lower than 4% of its workforce, Gizmodo estimates the whole cuts at roughly 9,000 jobs primarily based on inside bulletins and beforehand reported reductions all year long.

The corporate final disclosed its international workforce at 228,000 workers as of June 2024.

Right here’s how the layoffs have unfolded thus far: Fewer than 1 % of workers have been reduce in January (performance-related), greater than 6,000 jobs have been eradicated in Might, 300 extra in June. With this newest wave, Gizmodo calculates the whole cuts for July to be round 8,777 jobs, or simply underneath 4 % of the worldwide workforce.

“We proceed to implement organizational and workforce modifications which can be essential to place the corporate and groups for achievement in a dynamic market,” a Microsoft spokesperson mentioned in an announcement, with out offering additional particulars.

The cuts are impacting a spread of ranges, departments, and geographies. A supply aware of the matter instructed Gizmodo that Microsoft’s gaming division, which incorporates Xbox, is among the many areas affected.

Report Earnings, Report Cuts

The timing of the layoffs stands in stark distinction to the corporate’s monetary efficiency. Microsoft is the second-most invaluable firm on the earth, with a market capitalization of $3.65 trillion, trailing solely Nvidia. It’s also in glorious monetary form. In the latest fiscal quarter: its web earnings jumped 18 % to $25.8 billion, the corporate announced in April. Income climbed 13 % to $70.1 billion.

“Cloud and AI are the important inputs for each enterprise to broaden output, cut back prices, and speed up progress,” mentioned CEO Satya Nadella in April. “From AI infrastructure and platforms to apps, we’re innovating throughout the stack to ship for our prospects.” That innovation might also be making 1000’s of jobs out of date.

Whereas Microsoft has not formally linked these job cuts to its speedy adoption of AI, the timing raises questions. At Meta’s LlamaCon convention in April, Nadella instructed CEO Mark Zuckerberg that 20 to 30 % of Microsoft’s code is now written by AI instruments.

Microsoft CTO Kevin Scott has gone even additional, predicting that by 2030, AI will write 95 % of all code used on the firm.

The tech big has invested billions in generative AI, most notably by its shut partnership with OpenAI. That features integrating giant language fashions like GPT into Microsoft Workplace, GitHub, Azure, and Home windows merchandise. These instruments are able to writing, debugging, and deploying code, in addition to dealing with administrative duties, buyer assist, scheduling, and extra. The corporate is betting that these applied sciences will reshape how work is finished. However for a lot of workers, particularly in tech, AI is already changing duties and jobs.

Microsoft Is Not Alone

Throughout the business, executives at the moment are brazenly admitting that AI is shrinking their headcounts. Salesforce CEO Marc Benioff not too long ago mentioned AI is doing “50 % of the work” at his firm, simply earlier than asserting one other 1,000 job cuts. Klarna CEO Sebastian Siemiatkowski mentioned AI has allowed the fintech agency to cut back its workforce by 40 %. IBM and Duolingo have additionally confirmed that they’re changing groups or capabilities with AI methods

As AI instruments develop into extra succesful — and cheaper than full-time workers — firms could proceed to shed staff even whereas reporting document progress. Microsoft’s newest transfer solely reinforces that pattern. For now, the corporate insists it’s merely restructuring to remain aggressive. However for staff watching AI generate code and replica — and executives have fun these good points — the writing could already be on the wall.