After Microsoft this week unveiled a $4 billion, five-year global initiative to help millions of people adapt to the rise of artificial intelligence, the first question for Brad Smith, the company’s vice chair and president, wasn’t about the new program. It was about the company’s own layoffs.
What does he say to laid-off Microsoft employees who blame AI for taking their jobs?
Smith addressed that question and offered his broader perspective about AI’s impact on work — at Microsoft and across the global economy — during a press conference Wednesday and later in an interview with GeekWire.
Here are the key takeaways from his comments.
Smith said AI efficiency gains weren’t the primary driver of the layoffs — but acknowledged that rising capital expenses have added pressure to reduce operating costs.
Efficiency gains from AI were “not a predominant factor” in Microsoft’s layoffs totaling about 15,000 people over the past two months, Smith said. He pointed instead to shifting business priorities, changing market conditions, and the need to reallocate resources toward growth areas.
Long term, he said, AI will fundamentally reshape jobs at Microsoft and everywhere else.
But addressing the recent Microsoft cuts, he said, “The notion that AI productivity boosts have somehow already led to this, I don’t think that’s the story in this instance.”
In the follow-up interview, he acknowledged that rising capital spending have created pressure to rein in operating costs, which in the tech sector are “more about the number of employees than anything else,” he said.
Microsoft logged an estimated $80 billion in capital investments in its recently completed fiscal year, a record sum driven by the expansion of its infrastructure for training and running advanced AI models.
Smith acknowledged the human toll of the cutbacks. He defended the layoff process, calling it difficult, necessary, and carefully considered. He also disputed reports about impersonal or anonymous layoff notices.
Smith, who has been at Microsoft through multiple rounds of layoffs over the years, called each one “painful” but at times “indispensable” to setting the company up for future growth.
“We can talk about what’s good for the company as a whole, but if you’re the person who’s not part of that success that day, it’s not a good day,” he said.
Responding to reports that employees weren’t notified personally, Smith said Microsoft makes a point of delivering layoff news face-to-face whenever possible, treating people with respect, and providing severance packages that are more generous than industry norms.
He said the reductions were driven by business needs, not employee performance.
“We want the world to know that,” he said, “so that when they see somebody from Microsoft applying for a job, they know that in all likelihood, they have the opportunity to hire an extraordinarily talented individual.”
Addressing concerns about Microsoft’s culture, Smith said the company needs to stay true to its core values. He also cited the need for employees to adapt.
The job cuts have fueled employee concerns about a shift in Microsoft’s culture and whether the company is still living up to its stated values, as reflected in recent reporting by The Seattle Times and others.
Asked about the risks and opportunities for Microsoft’s culture during the AI transition, Smith said the company needs to stay focused on clear communication and a growth mindset.
“Even in a world of extraordinary GPU power, people are still our greatest asset,” he said.
At the same time, he said, “success on a sustained basis requires adaptation. It does require a focus on high performance. It does require on certain days that people work harder or smarter, or ideally both. And the nature of work itself will change the nature of jobs in certain areas.”
Referencing the 50th anniversary of the company’s founding, he said, “The jobs we have in 2025 are very different from the jobs we had in 1975. … And I think the key to success at an individual level is to constantly be asking, ‘What do I need to learn next?’”
There’s still a lot of uncertainty about the types of skills that will be required.
“I think we all are on a collective journey to discern and develop the new skills that are going to be needed” for success in the AI era, Smith said. “They’re not yet completely clear.”
That’s part of the thinking behind Microsoft Elevate, the new $4 billion, five-year program that consolidates the company’s philanthropic, education, and social impact programs with a focus on AI.
Microsoft says it wants to help 20 million people worldwide earn AI-related credentials over the next two years through partnerships with schools, nonprofits, unions, and community organizations.
As for the broader economy, Smith framed the current workforce changes as the latest in a series of pivotal moments dating back to 1800. He cited the shift from horses to automobiles as one historical parallel. He also pointed to his experience as a lawyer, seeing PCs reduce the need for legal assistants while creating new IT roles at the same time.
What would he say to longtime Microsoft employees who lost their jobs and then saw the company commit billions to broader workforce development?
Smith acknowledged the difficult juxtaposition but defended the separate moves as necessary.
“Success in life, whether it’s for an individual or a company or any kind of institution, is always about prioritization, and it’s always about investing in the future,” he said. “This is something that Microsoft should do for the future.”
He added, “It doesn’t mean that anyone should feel better. That’s not what I’m arguing. These kinds of decisions are always difficult.”
https://ift.tt/hiAKxF5 July 11, 2025 at 02:00PM GeekWire
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