Microsoft exec hints at hiring freeze as AI productivity gains soar
Microsoft may be planning a hiring freeze on the back of its AI productivity gains, according to comments made by Microsoft CCO Judson Althoff at the company’s AI Tour London event.
Speaking during the keynote address, Althoff said Microsoft is optimistic about the cost savings delivered by AI tools and that he’s committed to a headcount freeze over the coming years.
“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,” Althoff told attendees.
“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,” he added.
Althoff had mentioned earlier in his talk that Microsoft 365 Copilot has been deployed to all 65,000 of the firm’s employees, and that it’s already delivering promising results based on the measurements across its subsidiaries.
“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 said.
Althoff specifically highlighted the gains unlocked by AI agents, revealing Microsoft has deployed agents and assistants across a large range of areas where it engages with customers, such as its customer support organization.
“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.
“Employee satisfaction is going up because we’re making their lives easier. We’re actually helping nurture their career paths,” he added.
Headcount freezes are the new norm
Microsoft is by no means the first firm to suggest a potential hiring freeze as a result of AI productivity gains. Salesforce CEO Marc Benioff recently suggested the firm may not hire any new software engineers this year on the back of AI.
“We have seen such incredible productivity gains because of the agents that work side by side with our engineers,” Benioff said.
Fintech giant Klarna also made a similar move late last year, with CEO Sebastian Siemiatkowski revealing that natural employee attrition had brought the firm’s headcount down by 22% to 3,500 in the space of a year as productivity through AI has increased.
“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,” Siemiatkowski said at the time.
These firms continue a trend that can be traced back a number of years, with IBM revealing early on in 2023 that it would pausing hiring for non-customer-facing roles that could eventually be replaced by AI.
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