The Zhitong Finance App has learned that according to reports, Microsoft (MSFT.US) Azure president Girish Bablani has asked senior leaders of its department to find ways to cut costs by at least 20%. The move comes at a time when Microsoft is facing rising AI infrastructure costs and increased competition for AI talent.
According to the report, Azure as a whole has about 60,000 employees, while Bablani's team has about 11,500 employees. However, the report did not clarify whether these discussions would lead to layoffs or other specific measures.
A Microsoft spokesperson refuted the report, saying that Azure leadership had not directed the team to develop a cost reduction plan. The spokesperson said, “Azure leadership has not directed the team to develop a cost reduction plan. Every responsible company prepares for all kinds of scenarios and market dynamics, both positive and negative.”
High AI infrastructure costs and increased competition for talent
These cost discussions take place at a time when Microsoft is facing rising AI infrastructure costs and talent competition from companies such as Anthropic and Meta Platforms (META.US). According to the report, Azure leadership also discussed the cost of retaining employees in the context of AI talent competition.
Potential savings could include terminating external employee contracts, while Microsoft wants to increase employee productivity through more widespread adoption of AI.
Despite cost pressures, Azure's performance continued to grow rapidly. In the 12 months to June, Azure achieved revenue of US$101.9 billion, an increase of 40% over the previous year. In the quarter ending June, Azure's revenue increased by 43%, accounting for about 31% of Microsoft's total revenue.
Microsoft reorganizes cloud business leadership
Additionally, Microsoft is restructuring its cloud business leadership. Arun Ulag, who previously led the Azure database business, will assume broader responsibilities, including overseeing Azure Core executives. Azure Core is responsible for providing computing power to customers, including OpenAI.
According to the report, Azure head Scott Guthrie announced these changes internally on Monday and will continue to lead Ulag's work. Charlie Bell, the former head of security at Microsoft, will also report to Ulag.