July 11, 2012 - According to The Information, theMicrosoftLast week it was announced that it wouldLayoffs After launching its second major layoff of the year with 9,000 employees, the company asked its remaining salespeople to use theAIIncreased efficiency.
According to attendees, Travis Walter, Microsoft's head of SMB sales operations for the Americas, told a staff meeting on Monday, "We all need to use the AI Tools."
Walter recommended to employees Microsoft's in-house artificial intelligence tools designed to help salespeople get to grips with customer account information faster and automatically generate sales proposals. He emphasized:"This is a great opportunity to invest in your own learning AI skills."
While this statement from Microsoft executives isn't surprising, it is another reminder that white-collar jobs are rapidly changing as more and more organizations accelerate their embrace of AI tools.
The layoffs also reflect the fact that Microsoft is facing rising pressure on its data center and chip capital expenditures, which underpin its AI application infrastructure and that of its customers, including ChatGPT. Microsoft expects the company's capital expenditures to reach $80 billion in its fiscal year 2025, which ends in June, well ahead of the $56 billion it spent in the previous fiscal year.
Microsoft Chief Executive Officer Satya Nadella told investors in April that the company was working to achieve financial balance by "reducing costs and increasing efficiency. Its chief financial officer, Amy Hood, also said that capital spending growth would slow in the new fiscal year 2026.
At the meeting, Walter explained the layoffs in vaguer terms, saying it was to "better align investments within the company to better serve customers and partners."
"Incredible progress."
Walter noted that despite the layoffs, Microsoft's business continued to grow, especially in the fiscal quarter that ended June 30th. His division exceeded its quarterly goals for Azure cloud server sales and Microsoft's AI Copilot products, such as chatbots that help employees generate code, write documents or analyze company data.
He said, "We have made incredible progress this year, delivering an 'Olympic-quality' quarter."
Walter's division contributes roughly $30 billion of Microsoft's more than $250 billion in annual revenue, but it's unclear whether the division's results are representative of the company's overall performance in the last fiscal quarter.
Microsoft's heavy investment in AI in recent years has raised expectations for its future growth: revenue growth accelerated in its fiscal third quarter, reversing a slowdown in previous quarters. Microsoft attributed that growth to a boost in revenue from AI customers, including OpenAI -- which spent at least $2 billion on Azure server rentals for ChatGPT last year and expects to spend significantly more this year.
Similar to Microsoft, tech giants such as Google and Amazon have begun laying off employees due to rising AI costs. Google laid off hundreds of employees earlier this year and offered buyout packages to members of its search and advertising division. Amazon CEO Andy Jassy also recently warned that the company would replace employees with AI.
Microsoft currently has about 228,000 employees and has laid off 15,000 this year. Although the number of layoffs accounted for a small percentage of the total number of employees, this is the largest number of layoffs in a single year in Microsoft's history.
Streamlined sales program
Microsoft plans to reorganize much of its business around AI. In addition to encouraging employees to use AI tools more, the company is reorganizing its sales team to reduce the number of people dealing with customers, with the goal of getting more customers to buy AI products.
In the past, some customers complained that they had too many employees interfacing with Microsoft, and different salespeople tended to emphasize that their department's AI offerings were more important, according to two current salespeople. To address this, Microsoft has condensed the number of "solution areas" it pitches to customers from six to three: "business solutions" that include Copilot and Office 365, Azure cloud services and Cybersecurity.
In addition, Microsoft has changed the "Technical Specialist" position to "Solutions Engineer," with the goal of providing more specialized technical support to customers, such as how to use Copilot customizations or use more advanced AI intelligence on Azure. The change is intended to provide more specialized technical support to customers, such as how to use Copilot customizations or use more advanced AI intelligence on Azure. The realignment is said to show Microsoft's need for greater technical depth when it comes to helping customers. Microsoft is understood to be laying off some of its technical specialists and shifting some to solutions engineers.
Walter told employees this week, "The shift to solutions engineers signals the kind of technical depth we need to help our customers in this way."
$50 gift card
Microsoft management is increasingly focused on how employees are applying AI. a number of Azure division executives have set up internal dashboards to track the portions of their teams' code that are generated by AI, and are encouraging employees to make more use of these tools.
Currently, the use of AI tools is not an official metric in Microsoft's sales force performance evaluations. But during performance reviews this past month, several sales managers publicly recognized employees who were using AI tools. Some sales managers have also organized AI productivity innovation contests, encouraging employees to show how they can be more productive with AI, with the winner receiving a $50 gift card.
This week, Microsoft executives, including Nadella and Hood, will hold a sales mobilization event at headquarters to cheer on salespeople.
Ironically, however, a number of employees arrived in the Seattle area last week from overseas offices. According to a Microsoft manager who spoke with the laid-off employees, at least one of them didn't find out he was fired until after he landed, his conference tickets and hotel accommodations were canceled, and he was asked to leave the U.S. immediately.