In a bold move to enhance the utilization of its artificial intelligence tools, Microsoft is mandating that employees incorporate AI into their daily work practices. This initiative is not merely a suggestion; according to a report from Business Insider, the tech giant is planning to make the use of its AI services a critical component of employee performance evaluations. The company's leadership has expressed concern over the low adoption rates of these services, prompting them to instruct managers to assess team members based on their engagement with internal AI tools.

Julia Liuson, the president of Microsoft’s Developer Division, emphasized the importance of AI in a recent internal communication to staff. She stated, “AI is now a fundamental part of how we work. Just like collaboration, data-driven thinking, and effective communication, using AI is no longer optional — it's core to every role and every level.” This declaration indicates a significant cultural shift within Microsoft, marking AI as integral to the company's operational framework.

Beyond mere encouragement, managers have been directed to incorporate AI usage into their performance evaluation processes. According to two sources who spoke with Business Insider, some teams are even contemplating the introduction of formal metrics associated with AI engagement in forthcoming performance reviews. This strategic shift aims to bolster the internal usage of the company’s AI tools, particularly in light of disappointing adoption rates for Copilot, Microsoft’s AI coding assistant. The tool has faced stiff competition from other coding assistants, like Cursor, which have gained traction among developers.

As Microsoft pushes for the integration of AI tools, it is also navigating a tumultuous period marked by significant layoffs. The company has experienced multiple rounds of job cuts, particularly affecting its Xbox division and broader gaming operations. Reports indicate that another wave of layoffs is anticipated in July 2025, with thousands of jobs likely to be eliminated in the Xbox division as part of a larger organizational restructuring.

This upcoming reduction in workforce is poised to be substantial, according to internal sources, particularly within the gaming business that has faced increased financial scrutiny amid ongoing profitability challenges. The gaming sector's struggles have been further compounded by the closure of several game studios, as Microsoft seeks to streamline its operations following its monumental $69 billion acquisition of Activision Blizzard in 2023.

In June alone, Microsoft laid off over 300 employees, adding to the substantial workforce reductions that have seen more than 6,300 positions eliminated in recent months. The company appears to be at a crossroads, balancing the enhancement of its AI capabilities with the need for a leaner, more efficient operational structure.