Microsoft opens up about AI’s detrimental effects on employment to promote Copilot

The news: Microsoft is sharpening its AI sales pitch to companies with a more explicit offer: Use more technology and hire fewer workers.

• Amid declining adoption for Copilot, the company is doubling down on the labor savings that AI can offer, per The Information.
• “What CFOs are rightly asking for is, ‘Show me what you took out of our budget by using AI.’ We’re hearing that loud and clear,” Microsoft AI at Work CMO Jared Spataro said.

Less staff, more tech: There’s swirling concerns across industries about whether AI adoption could lead to layoffs. In fact, 48% of US adults think advancing AI in the workplace will decrease the number of jobs, per YouGov.

Already this year, 37% of companies have replaced workers with AI, per ResumeBuilder.

• The CEO of fintech company Klarna said in August that the company plans to use AI to cut 2,000 jobs.
• TikTok laid off hundreds of employees in October, replacing content moderators with automated tools.

Shifting approach: Now, Microsoft is being explicit about how its technology will contribute to a changing future of work, and how its own approach to staffing has changed.

“We’ve been able to improve our throughput per [customer service] agent by 12% using Copilot. That’s real money. That means we don’t have to hire as many people,” Spataro said.

But the harsh reality is Copilot isn’t performing as well as anticipated.

• “[The company says] AI is going to revolutionize everything, but the support isn’t there for AI to do 75% of what Microsoft claims it’ll do,” a Microsoft employee told Business Insider.
• Copilot’s user growth will decline to 15.8% YoY in 2026, per our forecast, down from 131.5% this year.

Our take: Microsoft’s frank approach to AI’s effects on staffing could bolster its image as an efficiency-driven company and attract more enterprise Copilot clients, but it might alienate workers and customers.

AI is able to replace some jobs—developers and coders are especially vulnerable—but the technology can’t run a company on its own. Identifying places where automated services can cut out external contractors could help reduce costs while minimizing effects on core employees.

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