Dive Brief:
- Microsoft continued recruiting AI specialists Monday as it announced a 2.1% global workforce restructuring that will eliminate nearly 5,000 jobs. Roughly two-thirds, or 3,200, of the layoffs will be in the company’s Xbox gaming division, according to a memo shared by Xbox SVP and CEO Asha Sharma on Monday.
- An AI-focused Microsoft subsidiary launched last week aims to embed 6,000 industry and engineering experts with customers to help design, deploy and scale AI systems. The tech giant invested $2.5 billion in the Microsoft Frontier Company initiative.
- “The roles eliminated today are not being replaced by AI,” Microsoft EVP and Chief People Officer Amy Coleman said in a Monday blog post. “At the same time … AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves. Our customers are navigating this same shift, and they’re counting on us to help them through it.”
Dive Insight:
The scramble to deliver AI results heated up last week as Microsoft joined a high-stakes effort to provide customers with implementation expertise. AWS ended June with a pledge to pour $1 billion into a forward-deployed engineering unit and Google stepped up AI talent recruitment in May.
Demand for AI-ready coders is surging and the unemployment rate for IT professionals dropped below 3% for the first time this year in June. Experienced AI engineering talent is hard to find, according to Peter Bryant, practice lead for GSI analysis at Omdia, a Channel Dive sister company.
“Proper FDEs are not that common,” Bryant told Channel Dive. “They are typically going to be the top 5% of engineering talent across every org — it’s an already small and expensive pool.”
As Microsoft gutted its gaming division, it put out a call for AI talent. The company listed more than 1,200 AI-related positions on its hiring site as of noon ET on Monday, including 60-plus posted in the previous 24 hours. In the AI software engineer category, Microsoft had 870 open positions, 44 of which were posted Monday.
Microsoft Frontier Company will be staffed with a combination of internal talent and external hires, the company told Channel Dive via email.
While a hiring frenzy drains the talent pool shared by managed services providers, systems integrators and other channel firms, FDE initiatives offer an upside for partners. Google Cloud intensified its AI talent hunt shortly after committing $750 million to a partner AI assistance program. When Anthropic and OpenAI launched partner programs this year, they both promised to provide partners with engineering expertise.
Microsoft has existing FDE partnerships with Accenture, Capgemini, EY, KPMG and PwC, Judson Althoff, CEO of Microsoft Commercial Business, said in the Frontier Company announcement. Extending its AI engineering reach to its partner ecosystem is now on the agenda, he added.
The AI-enablement window remains wide open for partners, especially in the massive midmarket, according to Omdia.
“There is enough work to go round, but partners who play the deployment strategist to the vendor FDE are going to be the best protected,” Bryant said. “For every hotshot engineer, there has to be a hotshot problem solver.”
