Microsoft is planning to cut thousands of jobs, mainly in its sales division, amid growing concerns that advancements in artificial intelligence (AI) are accelerating the replacement of human roles across the tech industry, according to a Bloomberg report. The latest round of layoffs follows a previous cut in May, which saw around 6,000 positions eliminated. Microsoft has been increasing its investments in AI to strengthen its position as businesses across various sectors rush to integrate this technology into their operations. Earlier this year, the company announced plans to spend approximately $80 billion in fiscal 2025, primarily on building data centers to support AI training and cloud-based applications.
The job cuts have raised questions about whether AI is being used as a pretext for layoffs or if there are deeper strategic and financial motives at play. Hyoun Park, CEO and chief analyst of Amalgam Insights, suggests that tech companies are still adjusting their workforce after over-hiring during the past decade based on unrealistic growth assumptions. “Tech companies were hiring with the assumption that they would grow at ridiculous rates that have not come to pass,” Park explained. He also noted that some companies believe they can reduce their salesforce, particularly in established industries where renewals often occur with minimal effort.
The layoffs may also indicate concerns about the short-term revenue potential of AI investments. While Microsoft is under pressure to invest heavily in AI to maintain its stock valuation, it may be turning to short-term operating expense reductions to support its financial performance. Park pointed out that the planned $80 billion investment in AI infrastructure assumes widespread adoption of Microsoft’s AI products, which remains uncertain. “Are 50 million+ people willing to pay an additional amount on Microsoft products to support AI? That is a massive bet that has been completely unjustified by the current AI market today,” he said.
Analysts also suggest that the focus on sales roles in the planned cuts reflects a broader shift in how enterprise sales functions are evolving. Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research, noted that the rise of AI-powered tools and self-service portals is reducing the need for large sales teams. “The rise of AI copilots, telemetry-rich self-service portals, and data-driven journey mapping is reducing the need for large in-region sales teams,” Gogia said. However, he added that while AI can personalize interactions at scale, it lacks the relational depth required for strategic deal-making and complex negotiations.
As Microsoft and other tech giants continue to invest in AI, the industry remains watchful of how these changes will impact workforce dynamics and revenue streams. The current adoption patterns of AI remain volatile, and companies are taking prudent measures to adjust to these uncertainties.
