Microsoft unveils $2.5 billion AI business after latest round of layoffs

Microsoft has announced the launch of Microsoft Frontier Company, a new AI engineering organisation backed by a $2.5 billion investment, as the company accelerates enterprise AI adoption while simultaneously moving ahead with its latest workforce reduction.

The announcement follows a Business Insider report stating that Microsoft is planning to cut thousands of jobs, with the reductions expected to affect less than 2.5% of its 220,000-strong global workforce. According to the publication, the layoffs are expected to impact employees across sales, consulting and the Xbox gaming division.

New AI organisation targets enterprise transformation

In a blog post, Judson Althoff, Chief Executive Officer of Microsoft Commercial Business, introduced Microsoft Frontier Company as a dedicated operating business focused on helping customers deploy AI at enterprise scale.

According to Microsoft, the company will invest $2.5 billion in the initiative and deploy 6,000 industry and engineering experts to work directly with customers on designing, implementing and continuously improving AI systems.

Microsoft said the organisation combines:

• Deep industry expertise.
• Enterprise AI engineering capabilities.
• Change management and operational improvement experience.
• Outcome-based AI deployment for enterprise customers.

The company described the new business as its largest engineering organisation dedicated to delivering customer-focused AI transformation.

Focus on intelligence, trust and customer data

Microsoft said the new organisation has been built around two principles it considers central to enterprise AI adoption: intelligence and trust.

According to the company, Microsoft Frontier Company will help organisations build AI systems using their own proprietary data, workflows and business expertise while allowing customers to choose from multiple AI models, including those from OpenAI, Anthropic, Microsoft AI, open-source providers and specialised industry models.

Microsoft also said customer data and intellectual property will remain protected and will not be used in ways that compromise competitive advantage.

Early projects already underway

Microsoft highlighted several customer deployments that have already been completed using the Frontier Company model.

According to the company, projects include work with:

• London Stock Exchange Group (LSEG) to integrate AI into LSEG Workspace for financial professionals.
• Land O'Lakes.
• Unilever.
• Novo Nordisk.

Microsoft said these engagements have focused on embedding AI into enterprise workflows while improving performance through continuous user feedback and iterative model refinement.

The company also confirmed it will work with global systems integration partners including Accenture, Capgemini, EY, KPMG and PwC to expand the programme globally.

Rodrigo Kede Lima to lead new business

Microsoft has appointed Rodrigo Kede Lima as President of Microsoft Frontier Company.

According to the company, Lima brings 30 years of industry experience and has spent the past six years leading enterprise transformation initiatives across Microsoft's businesses in the Americas and Asia.

His role will include overseeing customer engagement, AI engineering and partner collaboration as Microsoft expands the new operating business worldwide.

AI investment comes alongside workforce reshaping

The launch comes shortly after reports of Microsoft's latest workforce reduction.

According to Business Insider, the planned layoffs will affect thousands of employees, although the total is expected to remain below 2.5% of Microsoft's workforce of approximately 220,000 employees. The publication reported that the reductions are expected to include roles in sales, consulting and Xbox.

Microsoft has not linked the workforce reductions to the creation of Microsoft Frontier Company, and the company has not stated that the 6,000 experts supporting the new business represent new hires.

The simultaneous expansion of Microsoft's AI services and continued workforce restructuring reflects the company's broader effort to align resources with enterprise AI demand. As businesses increase investment in artificial intelligence, Microsoft is deepening its focus on large-scale AI deployment while reshaping parts of its existing organisation.