Microsoft's massive layoffs spark heated discussions! AI fully replaces white-collar workers, "nowhere to hide"?

Microsoft announced a new round of layoffs, which is just a reflection of a larger trend; Silicon Valley is undergoing a restructuring of the job market driven by AI.

This week, Microsoft announced it would cut less than 3% of its global workforce, affecting about 6,000 people, with software positions accounting for approximately 40%.

The reason behind this round of layoffs is the result of the company's internal AI automation strategy. Six current and laid-off employees indicated that executives had hinted at this for months, emphasizing the necessity of enhancing automation. Senior leaders across various departments have been reiterating a concept to their subordinates: use AI to improve productivity in roles such as sales, engineering, and customer support.

Not only Microsoft, but the entire tech industry in the U.S. is witnessing a trend of "AI replacing employees." Analysts believe that employment among the "Big Seven" tech companies has peaked, and we may see these companies no longer increase their workforce.

AI Replaces Human Labor: Microsoft Lays Off 6,000, with Software Positions Making Up 40%

This week, Microsoft laid off about 6,000 people. Although the layoffs only affect 3% of employees, this action is far from coincidental; it is the result of the company's internal AI automation strategy. According to The Information, Microsoft is actively promoting internal process automation, particularly in traditionally labor-intensive departments such as customer support, finance, and human resources.

Specifically:

The Experiences and Devices division is developing a Help Agent AI chatbot to handle customer technical support issues, theoretically capable of taking over roles in customer support and sales.

The sales team is being restructured, with each corporate client retaining only one point of contact, and sales personnel are required to use Research Copilot and Operations Copilot tools to quickly familiarize themselves with unfamiliar products.

The research department encourages researchers to use AI tools to summarize large datasets, shorten data analysis time, and use AI to write code for faster development of new product prototypes.

Notably, even Microsoft's development team has not been spared. Layoff documents from Microsoft in Washington state show that software engineers account for about 40% of the employees laid off in the state this week.

Molly Kinder, a researcher at the Brookings Institution studying the relationship between AI and the workforce, pointed out:

The layoffs in software engineering and AI at Microsoft are a bellwether for how generative AI is beginning to reshape the way work is done. Programming is at the forefront of AI integration, so it is not surprising that engineers are the first to feel the impact. They are the first— but certainly not the last.

The Tech Industry is Experiencing a Trend of "AI Replacing Employees"

In fact, Microsoft is not alone.

The Norwegian Sovereign Wealth Fund stated this week that it does not expect to increase staffing due to the development of AI, a trend also seen in tech companies like Shopify and DuoLingo. For many companies, the productivity gains driven by AI seem more attractive than hiring. Both Google and Microsoft have stated that artificial intelligence now writes or assists in writing 30% or more of the codeGoogle's parent company Alphabet has announced a freeze on hiring for certain non-technical positions and stated that it will enhance the productivity of existing employees through AI. Meta has been more straightforward, stating in its recent earnings call: "Our goal is to build a flatter and more efficient organizational structure than we have now, which means reducing personnel in certain functions."

Flybridge Capital Partners venture capitalist Jeffrey Bussgang stated in April this year:

I think we may have witnessed the peak employment of the "Tech Seven." We may see these companies no longer increase headcount. They will only grow revenue by 20-30% annually while keeping headcount stable.

From the recent earnings calls mentioning generative AI, many companies—not limited to the tech sector—are using this technology to improve operational efficiency, particularly in coding, research, customer service, and marketing:

• Intuit stated in February: With generative AI code assistance, our coding productivity has increased by up to 40%.
• Expedia stated in May: Our marketing team is using generative creative AI to make marketing more effective while saving time.
• Coca-Cola stated in February: This year, our Coca-Cola Christmas advertisement was created using generative AI for the first time, combining emerging technology with human creativity, allowing us to produce ads faster and at a lower cost.
• Palantir stated in May: We're not talking about a co-pilot that boosts your productivity by 50%, but an agent that boosts your productivity by 50 times