In early June, Aaron Damigos, a web support associate at Microsoft, received a dreaded calendar invite for a business update meeting that included HR, his manager, and upper management.

This meeting resulted in the sudden end of his employment, a fate shared by approximately 1,000 other Microsoft employees. The layoffs primarily affected the mixed reality and Azure cloud departments, as well as Damigos’ consumer sales division.

A leaked email from Jason Zander, Microsoft’s executive vice president of strategic missions and technologies, revealed the company’s pivot to artificial intelligence (AI) as the driving force behind the layoffs.

“Our clear focus as a company is to define the AI wave and empower all our customers to succeed in the adoption of this transformative technology,” Zander stated. Despite not being explicitly told that AI advancements led to his job loss, Damigos acknowledged the company’s strong commitment to AI, reflecting on the potential of his former team to enhance customer experiences.

Microsoft spokesperson Craig Cincotta did not confirm the authenticity of Zander’s email but emphasized the necessity of organizational adjustments. “We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners,” Cincotta said.

The impact of AI on the workforce is a subject of ongoing debate. While many experts agree that AI will not replace most workers shortly, the current wave of layoffs underscores the immediate effect of AI-driven strategic shifts.

“AI will reshape the labour market,” noted Nick Bunker, director of economic research at Indeed, “but it’s just not clear how it will reshape it.”

Microsoft is not alone in this trend. In April 2023, Dropbox announced 500 layoffs, with CEO Drew Houston attributing the decision to the company’s shift towards AI and early-stage product development.

Meta’s Mark Zuckerberg echoed this sentiment, citing the need to build advanced AI products and services as a reason for recent job cuts. Similarly, Google has invested heavily in its Anthropic AI developments, with CEO Sundar Pichai indicating that more cuts are anticipated throughout 2024, despite the company’s strong growth.

The transition towards AI has been likened to past trends in outsourcing, which often led to poor working conditions for contracted workers abroad.

Parul Koul, president of the Alphabet Workers Union-CWA, suggested that the AI narrative might be a cover for broader strategic shifts that predate the AI boom. Transparency around the reasons for layoffs remains limited, making it difficult to directly link job cuts to AI.

According to Challenger, Gray, and Christmas, a firm specializing in outplacement services, more than 5,000 jobs were cut between May 2023 and April 2024 due to companies shifting focus to AI or using AI tools to automate tasks. In the tech sector alone, nearly 100,000 layoffs have occurred in 2024, based on data from Layoffs.fyi.

Despite the job cuts, the demand for AI-related roles is rising. CompTIA, a nonprofit trade association for the US IT industry, reported that AI roles made up 12% of all tech job offerings in May, the highest percentage in six years. Tim Herbert, CompTIA’s chief research officer, predicted that AI would spur investment in related areas, potentially creating new job opportunities.

Koul emphasized the need for companies to invest in retraining and upskilling their workforce to adapt to AI advancements. “There are ways in which the existing workforce can be kept whole or treated with dignity and respect through this process,” Koul said. “More opportunities for retraining and moving people to other divisions would be very welcome.”

As the AI revolution continues to reshape the tech industry, companies face the challenge of balancing innovation with workforce stability. The current wave of AI-driven layoffs serves as a stark reminder of the disruptive potential of new technologies and the importance of supporting employees through these transitions.