Microsoft announced layoffs impacting 3% of its workforce, or roughly 6,000 employees, but it appears software engineers are among the most impacted.

News broker earlier this week that Microsoft was laying off roughly 6,000 employees, describing it as “organizational changes.”

“We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace,” a Microsoft spokesperson said at the time.

Interestingly, as more details have emerged, it appears the majority of the layoffs in the Silicon Valley region are impacting software engineers. According to the LA Times, software engineers, software engineers make up 53% of those losing their jobs in this round.

The news shouldn’t necessarily come as a surprise. In early May, CEO Satya Nadella revealed that 20-30% of the company’s code is now written by AI. The company apparently believes its AI coding tools are good enough to warrant reducing its software engineer headcount in response.

Multiple companies have made similar decisions as Microsoft, reducing their staff as AI tools improve. Programming is an area that is seen as particularly vulnerable to this trend, as AI tools have continued to evolve.

Not Everyone Is On Board With AI Replacing Software Engineers

Not everyone is convinced, however. Even IBM CEO Arvind Krishna—who famously said AI would replace the a significant part of IBM’s back-office roles—has said he believes AI-generated code will remain a minority.

“I think the number is going to be more like 20-30% of the code could get written by AI — not 90%” Krishna said at SXSW, referencing a recent statement by Anthropic CEO Dario Amodei. “Are there some really simple use cases? Yes, but there’s an equally complicated number of ones where it’s going to be zero.”

“If you can do 30% more code with the same number of people, are you going to get more code written or less?” he added. “Because history has shown that the most productive company gains market share, and then you can produce more products, which lets you get more market share.”

“It’s a tool,” Krishna said. “If the quality that everybody produces becomes better using these tools, then even for the consumer, now you’re consuming better-quality [products].”

Krishna’s view is supported by the current data. A study by none other than OpenAI—arguably the leading AI firm—found that even the most advanced “frontier models” still cannot solve the majority of programming tasks, ranging from small bug fixes to $32,000 feature implementations.

We evaluate model performance and find that frontier models are still unable to solve the majority of tasks. To facilitate future research, we open-source a unified Docker image and a public evaluation split, SWELancer Diamond (https://github.com/ openai/SWELancer-Benchmark). By mapping model performance to monetary value, we hope SWE-Lancer enables greater research into the economic impact of AI model development.

Conclusion

Only time will tell if Microsoft continues to lay off software engineers, or if this was an isolated realignment. It’s possible the company is trimming its programming headcount as a result of AI writing the 20-30% of code Nadella talked about.

The real question is whether Krishna is right and AI’s coding contributions will be limited to the roughly 30% Microsoft is already at. If so, it’s unlikely there will be more large-scale layoffs of software engineers. If Krishna is wrong, however, the layoffs may be just beginning.