Microsoft's Recurring Decimal

Microsoft is planning to cut under 2.5% of its workforce, according to Business Insider. The company, like most of its peers, has stopped reporting employee numbers with any precision. This might be the tenth round of cuts since 2022, or the twelfth; nobody outside Redmond keeps count because the pattern is always the same. A percentage. A vague reference to 'strategic realignment.' The quiet implication that AI made some roles redundant.

Except it didn't. Two weeks ago, in this space, I noted that Ford was rehiring 350 veteran engineers—'gray beards'—after discovering that AI cannot replicate tacit knowledge. The layoff narrative, I argued, was a CEO's dream: cut headcount, blame the machines, and pocket the savings. Microsoft's latest move fits this thesis perfectly. The company's own data shows that firms investing most heavily in AI are typically faster-growing and better-funded—not the ones slashing jobs. The correlation between AI adoption and layoffs is a myth, propped up by companies that would be cutting staff anyway.

Look at the timing. Microsoft's revenue is up. Its cloud business is booming. It just spent billions on AI infrastructure. The only plausible explanation for these layoffs is that they are business as usual—the quarterly ritual of trimming 'underperformers' to keep the stock price happy. But the company, like its peers, enjoys the AI cover story. It allows executives to frame mass firings as forward-looking efficiency rather than simple penny-pinching. The truth is more prosaic: Microsoft, like most large tech firms, over-hired during the pandemic and is now methodically reversing course, using AI as a fig leaf.

The 'new data' from Business Insider itself—published the same day—throws a wrench into the AI-layoffs narrative. It reveals that the companies buying the most AI are precisely those that are expanding. If AI caused job losses, you would expect the opposite. You would expect AI-heavy firms to be shrinking. Instead, they're growing. This is not a contradiction. It is evidence that AI, for now, is a complement to labour, not a substitute—except in the stories that CEOs tell Wall Street.

Meanwhile, the workers who lose their jobs are told they are being replaced by progress. They are not. They are being replaced by quarterly targets. The same human resources algorithm that determined headcount in 2019 is still running, but now it has a new name: 'AI-driven workforce optimisation.' Call it what you like.

So here is the position I am taking: the next time a tech CEO blames AI for layoffs, demand the spreadsheet. Show the actual productivity gains. Prove that the job was eliminated, not just the salary. Until then, assume the usual: that the rich get richer, the shareholders get their buybacks, and the workers get a footnote about 'restructuring.' Microsoft's recurring decimal of layoffs is not a sign of the AI revolution. It is a sign that the old revolution—cost-cutting as a management principle—is still going strong.