Microsoft Cuts 10,000 Customer Service Jobs as AI Adoption Reshapes Support Operations

Microsoft Confirms Major Reduction in Support Workforce

Microsoft has announced a significant reduction of approximately 10,000 customer service jobs, attributing the cuts to the adoption of AI systems that handle customer interactions more efficiently. The move is part of a broader trend in which companies are leveraging generative AI to streamline operations and reduce costs.

According to a person familiar with the operations, Microsoft has trimmed its support workforce—a mix of contractors and full-time staff—from about 50,000 to roughly 40,000 in recent years. The company is both a leading vendor and a heavy user of customer service automation tools.

Judson Althoff, who runs Microsoft's sales and service operations, said in April that AI is saving the company about $750 million a year in customer service costs. He noted that more complex problems still require a human agent while the company keeps expanding what its systems can fix automatically.

Layoffs Extend Beyond Customer Service

Microsoft's customer service headcount reduction has come alongside sizable layoffs elsewhere at the company. On July 6, Microsoft eliminated about 4,800 roles, roughly 2.1% of its global workforce, with the heaviest cuts falling on its Xbox and commercial divisions. Chief People Officer Amy Coleman told employees the roles cut that day were not being replaced by AI, though she said AI is changing how certain tasks get done.

Other Companies Also Cut Support Roles

Uber has cut 10% of jobs in its customer service operations, describing the move as an effort to embrace artificial intelligence more fully. The company now directs support requests through its app to an AI chatbot before a human agent gets involved.

Commonwealth Bank of Australia, the country's largest lender, has cut hundreds of positions from its chat support line since weaving AI into the system. People familiar with the matter said the change is saving the bank tens of millions of dollars a year. Many of the affected workers were contractors at a call center outside Johannesburg, South Africa, run by the outsourcing firm Nutun, whose contract with the bank was cut back as AI absorbed more of the workload. A Commonwealth Bank spokesperson said the bank has added more than 140 roles at its Australia-based call centers over the past six months.

Hyatt Hotels cut about 30% of its in-house guest services and support staff for the Americas in June 2025. A company spokesperson attributed the reduction to changing patterns in guest inquiries and business needs, and said the cut was not related to AI deployment. Separately, Hyatt has confirmed that AI is now cutting its customer service costs. Pat Nestor, who runs the hotel chain's AI and data analytics operation, said automating simple requests such as reservation changes and receipt requests is reducing what the company spends on support, calling cost reduction a driver of such initiatives. Hyatt relies on the AI startup Sierra, co-founded in 2023 by Bret Taylor, who serves as OpenAI's chairman.

Tier One Support Disappearing Fastest

At most large companies, call center workers spend their days answering routine requests such as checking an account balance, changing a flight time or confirming store hours. That simplest tier of support, often called tier one, is disappearing fastest, while companies generally keep staff trained to handle more complex or higher-value interactions.

Not every company has cut its workforce outright. Brinks Home used AI to cut call volume by about two thirds, which let it shrink its call center staff from about 800 to 400, but Chief Information Officer Philip Kolterman said the company avoided firing most of those workers by moving several into other divisions and relying on natural attrition for the rest.

Outsourcing companies that supply tier one call center staff to large clients are feeling the pressure directly. Teleperformance, which handles customer support for Brinks Home out of a site in Jamaica, has seen its stock price drop steeply alongside peers Concentrix and TTEC Holdings as AI cuts into the work outsourcing firms perform for clients. Concentrix said in its most recent annual report that lower complexity services once handled by its staff have been reduced.

Sources

• AI is eliminating thousands of customer service jobs