According to sources familiar with plans and internal documents, Microsoft's latest round layoffs will be to modify their strategy for selling artificial intelligence tools amid increasing competition between Openai and Google.
People said the company's recent job offers include thousands of salespeople, and targeted traditional salespeople who are primarily trying to replace AI tools with more technical salespeople in order to better sell them.
On July 2, Microsoft said it plans to fire under 4% of its workforce, bringing about 9,000. Companies usually make changes to their labor around this time of year.
People said Microsoft plans to replace many traditional salespeople, often referred to as “experts,” with “solution engineers,” who can show customers real demos before in the sales process.
Microsoft plans to ensure that the company replaces several professional roles with solution engineers to increase technical and industry understanding between Salesforce, and hire more salespeople outside its headquarters to attract more sellers on-site.
The company receives feedback from customers that they need to engage too many salespeople before they can reach technical details and demos. “Customers want Microsoft to take you to the technicians right away,” one of the people said. “We need more technical people much earlier in the cycle.”
This change is due to Microsoft facing increased competition for AI business customers. Microsoft has the advantage in that many large companies already use other tools, but many of the employees of those companies want the more well-known ChatGPT.
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Sales cuts are linked to plans to simplify the way Microsoft sells AI internally and in detail earlier this year.
In a note to the sales organization the day before the layoffs were announced, Microsoft Sales Chief Judson Althoff laid out a vision for revamping the organization.
Althoff has outlined five priorities for sales organizations, including “continuous agility” and “reinventing Microsoft and McAps,” becoming a “frontier AI company,” and “establishing co-pilots across all devices and roles.”
Althoff also announced internally in April to cut the number of “solution areas” in its sales team by half for the next fiscal year, starting on July 1st. BI got a copy of the slide from his presentation.
Microsoft previously had six solution areas: Modern Work, Business Applications, Digital & App Innovation, Data & AI, Azure Infrastructure and Security. Starting July 1st, these areas will be combined into three slides: AI Business Solutions, Cloud & AI Platform, and Security.
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