Earlier this week, Microsoft laid off 9,000 employees just after it ended its fiscal year, which translates to about 4% of its workforce. The layoffs impacted most of the company's divisions, including Xbox and Azure:
"We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace."
As it turns out, the layoffs seem to be part of Microsoft's strategy to improve its sales of AI tools metrics. According to Business Insider, the vast majority of employees affected by the recent layoffs were salespeople.
The report further suggests that Microsoft intends to replace the affected employees with more technical salespeople to boost the sale of its AI tools as it tries to play catch up with Google and OpenAI.
This news comes after a separate report suggested that Microsoft often pesters OpenAI, requesting help to spell out the inner workings of its tech to employees. A source disclosed that Microsoft doesn't have the technical know-how to fully leverage its IP rights and often doesn't know what questions to ask.
As such, Microsoft plans to leverage these technical salespeople (often referred to as "solution engineers" internally) to better present products to customers, incorporating demos earlier on in the sales process.
So, Microsoft is reportedly using this approach to bolster AI sales by prompting technical and industry understanding among its customers. However, the company is also set to hire more salespeople, which it plans to use beyond its headquarters.
A person with close affiliations to Microsoft revealed that feedback from customers indicated that the sales process was a tad daunting and took too long before getting to the demos and technical aspects of the sales process:
"The customer wants Microsoft to bring their technical people in front of them quickly. We need someone who is more technical, much earlier in the cycle."
Interestingly, a separate report suggests that Microsoft struggles with Copilot sales, predominantly because most corporations prefer OpenAI's ChatGPT.
As you may know, Microsoft is doubling down on its AI efforts despite the gigantic rift forming between its partnership with OpenAI over its time-sensitive, for-profit evolution plans.
In an email sent to the company's top management, Microsoft's President of Developer Division and GitHub, Julia Liuson, pushed for the broad adoption of internal AI tools like GitHub Copilot across the company. She further revealed that it would be used as a metric during performance evaluations:
"AI is now a fundamental part of how we work. Just like collaboration, data-driven thinking, and effective communication, using AI is no longer optional — it's core to every role and every level."
This isn't the first time the tech giant has been impacted by massive layoffs this year. It started off the year on a bumpy ride by announcing performance-based job cuts across several departments, including security, slated to impact "less than 1%" of the workforce:
“At Microsoft we focus on high-performance talent. We are always working on helping people learn and grow. When people are not performing, we take the appropriate action.”
Shortly after, there was another round of layoffs, this time impacting employees across security, experiences, sales, devices, and gaming departments. Later that month, the Redmond giant announced a hiring freeze, which impacted its consulting business in the U.S. as part of its broader plans to cut costs.
Microsoft CEO Satya Nadella is betting big on AI and is slated to continue heavily investing in landscape, including an $80 billion investment for building data centers to meet the company's cloud computing needs. The company has heavily integrated AI across its tech stack to drive more interest and leverage its dominant Windows market share to gain broad adoption. This is despite mounting profitability concerns among investors and its reported internal struggles with Copilot and AI.
