Report says Microsoft engineers worked to create AI systems, then fired and replaced with same AI systems

Microsoft's recent layoffs have hit software engineers the hardest — just as the company pushes aggressively into AI-driven coding.

Microsoft’s recent layoffs have hit software engineers the hardest, just as the company pushes aggressively into AI-driven coding. According to a CNBC report, the tech giant announced cuts affecting roughly 6,000 employees globally. But internal data reveals a disturbing trend: over 40 per cent of the layoffs in Washington state targeted software engineers, as per a Bloomberg analysis. Even more unsettling? Some of these engineers were reportedly instructed months earlier to increase their reliance on AI tools, only to later find themselves out of a job as the very technology they helped integrate replaced their roles.

According to a report by The Information, Jeff Hulse, a Microsoft VP overseeing 400 engineers, had directed his team to use OpenAI-powered chatbots to generate up to 50 per cent of their code — a good enough rise from the general 20-30 per cent AI contribution. Weeks later, his team was among those who lost their jobs as part of the layoff process. The timing raises uncomfortable questions: were these engineers unwittingly training their own replacements? Microsoft CEO Satya Nadella has openly talked about AI, writing nearly a third of the company’s code in some projects, framing it as a productivity breakthrough. But for the engineers suddenly out of work, it’s a harsh reminder of corporate priorities.

The layoffs weren’t limited to junior coders. Employees in product management and technical program management roles, along with workers assigned to AI projects, were also caught in the crossfire. Gabriela de Queiroz, Microsoft’s Director of AI for Startups, publicly confirmed her dismissal, calling it "bittersweet" and expressing grief for colleagues who "cared deeply, went above and beyond, and truly made a difference." Meanwhile, state filings show that customer-facing roles like sales and marketing were largely spared.

Microsoft insists the restructuring is about removing management layers, but the numbers tell a different story. Only 17 per cent of the Washington layoffs were managers, mirroring the company’s overall managerial ratio. The real driver appears to be cost-cutting amid massive AI investments, including data centre expansions and OpenAI partnerships.

Beyond the raw numbers, the layoffs have sparked protests, including an incident at Microsoft’s Build 2025 event where an employee, Joe Lopez, disrupted proceedings to condemn the company’s contracts with the Israeli government. For many engineers who lost their jobs, the hardest part is knowing they helped Microsoft transition to AI-driven development, only to be let go because of it.