Big Tech is posting record profit but still asking employees to leave, should you blame AI?

Microsoft is offering up to 60,000 of its employees voluntary exit from the company. These are not layoffs in the conventional sense. Or maybe the choice of words is deliberate, to perhaps lessen the blow. We cannot say for sure. But what all this means is that Redmond does not need these employees anymore even if it expects only 3,000 or fewer will opt in. According to latest financial data, Microsoft has 2,23,000 full-time employees globally. If and when 60,000 of these employees choose to leave, that number will come down drastically. Evidently, Microsoft doesn’t mind the shrink.From the outside, the strategy raises more questions than it answers. Particularly, if you’re someone who is aspiring to work for Microsoft, the turn of events could be nerve-wracking. Business is booming. The Voluntary Exit Offer (VEO) is coming hot on the heels of the company clocking record $92.3 billion revenue, the largest in its history. When there are no earth-shattering losses to contend with, why does Microsoft want 60,000 of its employees to seriously reconsider their future at the company? What’s baffling is that Microsoft is not alone. Oracle reported $19.3 billion revenue in the last quarter, an increase of 30 per cent compared to last year, and still cut over 30,000 jobs. Amazon made $201.9 billion, a 12 per cent increase in revenue, and yet, over 16,000 employees lost their jobs this year. If you did not know any better, you’d think that this is a probably a trend. AI takes over AI is an obvious contender. The same companies making these exit and layoff calls are pouring billions into AI. Capital expenditure (CapEx) sheets are going through the roof even if free cash flow is going negative. Experts believe that these companies are getting ready for the future. “If a company is making more money, why does it need to let people go? The paradox dissolves when you realise layoffs are not a reckoning with the past but a redesign of the future,” Ruchi Sharma, assistant professor at IMI Kolkata tells India Today Tech. While AI is one reason, it may not be the only reason why tech companies are revamping their employee structure. “Companies may be correcting pandemic-era over-hiring, removing layers of management, ending projects that no longer fit their strategy, or moving money towards new priorities such as AI infrastructure,” Sharma adds. “Increasingly, tech companies are focusing now on operational efficiency, optimising costs and boosting margins rather than expanding the headcount,” Kumar Rajagopalan, Dexian VP and India head, says, adding that the revamp has got more to do with changing business priorities than balance sheets. It is increasingly becoming clear that AI is the catalyst though. SUSE, an open-source software firm that builds Linux-based operating systems, recently laid off 10 per cent of its staff. In a memo to employees, company CEO Dirk-Peter van Leeuwen pointed out that because of AI, teams could function with fewer people. “The requirement for some existing roles has greatly diminished,” he said. “Other roles will evolve over the next few years.”Jayanth Neelakanta, CEO of Equip, jots down the reasons why. “AI is smarter than most people at most tasks now. It doesn’t get tired, doesn’t miss deadlines, and costs a fraction of a salary,” he tells India Today Tech. “So, a company can grow revenue without growing headcount. Every new customer used to mean more people in sales, support and engineering. Now a lot of that work is handled by AI and the marginal cost of serving one more customer is close to zero.”In fact, going by Anthropic’s S1 IPO filing, the company has a revenue per employee of roughly $6.6 million, thrice that of Google.What to do As these workplace changes happen—possibly things will get worse before they get better—there is one thing that AI can’t replace. It is human ingenuity. “The idea that companies will no longer need people is an oversimplification. Human judgement, creativity, customer understanding and accountability remain essential,” Bajrang Saharan, CEO of Pressmate OS, explains. To be able to find their footing in this increasingly competitive world, the aspiring tech workforce must adapt. Humans are not perfect, but they must learn to grow beyond mediocrity. “For aspiring computer science students, the key is to go beyond textbooks and focus on solving real-world problems through technology,” Saharan says. “Start by building a strong foundation in programming, databases and software development, while gaining hands-on experience through projects, internships and open-source contributions.” They must learn to fight AI with AI regardless of the role or position they are aiming for. Teevea EduTech founder Vivek Varshney, says that students can use Claude or Codex to learn and understand code. “These tools can explain errors, review code and guide students through real projects,” he tells India Today Tech. “Used well, they can significantly improve programming learning outcomes, helping students move from using AI to understanding it and then building with it.”Even at Microsoft, areas like AI infrastructure, data centres, cybersecurity, and advanced cloud engineering, remain mostly insulated from the exit plan or potential layoffs. In other words, nature of jobs is clearly changing. Modernization of the workspace is happening. The world may not be the same again, but humans can—and they will—learn to live in this new world. - Ends