Microsoft report: 1 in 3 business leaders are considering replacing workers with AI

Microsoft's annual Work Trend Index report is here and, unsurprisingly, AI is the hot topic in the 2025 edition.

The big takeaway: 1 in 3 business leaders say that they are considering layoffs as a result of AI deployment in their companies. According to the report, 33 percent of leaders are already "considering headcount reductions" because of AI.

The new report also highlights how "frontier firms" are integrating AI into their workflow. Microsoft describes these frontier firms as companies "structured around on-demand intelligence and powered by 'hybrid' teams of humans + agents."

"Frontier Firms are already taking shape, and within the next 2-5 years we expect that every organization will be on their journey to becoming one," says Microsoft.

According to the report, 81 percent of business leaders say that AI agents will be "moderately or extensively integrated" into the company's strategy over the next year. Close to half of the business leaders surveyed in the report say that "expanding team capacity" with AI agents is a top priority.

For some companies, the shift is underway now, with 46 percent of business leaders saying that their company uses AI agents "to fully automate workflows or processes." Another 24 percent of leaders say that AI is currently deployed throughout their company in some capacity.

Microsoft's Work Index Report does stress the importance of the "human-agent team," highlighting that human workers are still needed. In addition, 78 percent of business leaders say that they are considering hiring for AI-specific roles. And on top of that, AI startups are hiring at "nearly twice the pace" of big tech companies, according to an analysis of LinkedIn data.

To create the 2025 Work Trend Index report, Microsoft surveyed 31,000 workers around the world and factored in LinkedIn labor market trends.