Microsoft has quietly revealed that artificial intelligence tools have saved the company over $500 million in its call centers alone over the past year, reinforcing the growing role of automation in corporate efficiency.

The internal admission, disclosed by Chief Commercial Officer Judson Althoff during a private presentation and first reported by Bloomberg, shows that AI is not just transforming productivity—it’s now playing a critical role in reshaping Microsoft’s workforce and cost structure.

The revelation comes just one week after Microsoft laid off more than 9,000 workers in its third major round of job cuts this year, bringing the total number of layoffs across the company in 2025 to nearly 15,000. These layoffs cut across departments, including Xbox, sales, customer service, and software engineering.

Microsoft’s announcement—celebrating efficiency gains from AI tools like Copilot, which now generate more than 35% of all new code—follows its revenue moment. The company reported $26 billion in profit and $70 billion in revenue in the most recent quarter. Its market capitalization surged to $3.74 trillion, displacing Apple and sitting just behind Nvidia, whose AI chips power Microsoft’s AI infrastructure.

Layoffs Amid Booming AI Profits

To many laid-off workers, the juxtaposition between record profitability and job loss stings, and the internal remarks have stirred resentment within the company.

While Microsoft hasn’t publicly attributed the latest layoffs directly to AI replacement, internal actions suggest a reshuffling of priorities that favor automation over manpower. The company has indicated that its call centers now rely heavily on AI to manage routine customer service functions, cutting down on the need for human agents. Althoff said AI support has enabled Microsoft to better serve smaller customers while keeping human staff focused on high-value clients.

At the same time, engineering teams are leaning more heavily on generative tools to accelerate software development. Copilot, Microsoft’s AI coding assistant, is contributing more than a third of the company’s production code, shrinking development timeframes and potentially reducing the need for large engineering teams.

Microsoft is also replacing some of the laid-off workers with more technically specialized roles. According to Business Insider, the company is prioritizing the hiring of “solution engineers” with strong AI and product knowledge to help push its enterprise tools like Copilot.

The tension between Microsoft’s AI-driven gains and its human cost has been further amplified by a controversial, now-deleted LinkedIn post from Matt Turnbull, a producer at Xbox Game Studios. In the post, Turnbull suggested that employees affected by the layoffs could turn to AI tools like ChatGPT and Copilot to help manage the emotional and cognitive load that comes with losing a job.

The post drew immediate backlash, with critics calling it “tone-deaf” and out of touch with the real pain of unemployment. It was quickly deleted, but the damage had been done, casting a shadow over Microsoft’s internal messaging and highlighting the emotional toll of AI-led restructuring.

AI as the New Corporate Workhorse

Microsoft’s embrace of AI is part of a broader industry shift. The company plans to invest $80 billion in AI infrastructure throughout 2025, focusing heavily on data centers, high-performance computing, and the continued rollout of AI-powered productivity tools across its ecosystem. Internally, executives have described this pivot as a redefinition of the company’s mission around “frontier AI.”

Insiders believe the $500 million in savings from AI is just the beginning. Microsoft expects similar efficiencies across other divisions in the coming years. Althoff emphasized that these gains are not just about saving money but also about enabling scale, noting that AI tools help Microsoft better serve a broader base of customers without proportional increases in staffing.

However, critics argue that the company’s gains are coming at the expense of its workforce. Many of the 15,000 jobs lost this year were in functions that AI is now beginning to replace—customer service, product marketing, and low-to-mid-tier software engineering. That’s leading to growing concern over what kinds of roles will survive in a corporate world increasingly defined by automation.

The layoffs and internal restructuring are occurring as Microsoft races to stay ahead in the AI arms race. In addition to deepening its investment in OpenAI, the company is pursuing AI dominance on multiple fronts—from Azure-based Copilot products to partnerships with AI chipmakers and a growing portfolio of AI-powered productivity and infrastructure services.

It is believed that Microsoft’s goal is to become the premier platform for enterprise AI across industries. The company is already one of the largest consumers of Nvidia’s AI chips and continues to funnel billions into expanding its AI datacenters around the globe.