Microsoft may be planning to implement a hiring freeze, according to statements made by Microsoft’s Chief Commercial Officer, Judson Althoff. Althoff made these comments at the company’s recent AI Tour in London, expressing optimism about the cost savings generated by AI tools and indicating a commitment to not increase headcount for the coming years.
During his keynote speech, Althoff told attendees, “We have a set of the top 10 projects that are going to create the next billion dollars worth of savings inside of our organization.” He added, “So much so that I’ve gone to my board and I’ve committed that we’re going to continue to grow revenue in the mid teens, our current rates, without adding any incremental headcount for the next three years.”
Althoff highlighted the impact of Microsoft 365 Copilot, deployed across the company’s 65,000 employees. He cited promising results, noting significant improvements in key performance indicators. Specifically, he stated, “I can tell you that my top quartile of copilot users generate 10% more pipeline, have 23% faster close rates, and have 9% more revenue per head against their own baseline, against their own personal best.”
Althoff emphasized the benefits of AI agents, illustrating Microsoft’s application of these tools across customer-facing areas, such as customer support. “We are saving over $500 million this fiscal year alone with these capabilities. On top of that, customer satisfaction is going up and employee satisfaction is going up,” Althoff said. He added that employee satisfaction is improving “because we’re making their lives easier. We’re actually helping nurture their career paths.”
Microsoft’s consideration of a hiring freeze is not an isolated instance. Other companies have also indicated similar strategies due to the increasing productivity gains generated by AI tools. Salesforce CEO Marc Benioff recently suggested his company might not hire new software engineers this year due to AI enhancements. Benioff noted, “We have seen such incredible productivity gains because of the agents that work side by side with our engineers.”
Fintech company Klarna had a similar experience. CEO Sebastian Siemiatkowski revealed that natural employee attrition had led to a 22% reduction in headcount, to 3,500 within a year, as AI-driven productivity increased. Siemiatkowski at the time said, “We’re going to give some of the improvements that the efficiency that AI provides by increasing the pace at which the salaries of our employees increases.”
This trend began some time ago. IBM announced early in 2023 that it would pause hiring for non-customer-facing roles, as those could eventually be handled by AI.
