The team behind Microsoft Azure is reportedly being asked to tighten its belt. A top executive in the cloud division is said to have requested a 20 percent cost reduction, according to The Information. Microsoft denies the report and states that any responsible company prepares for all kinds of scenarios, both negative and positive.
According to The Information’s sources, the request comes from Girish Bablani. He leads the Azure group that builds the software for Microsoft’s cloud servers. That division has approximately 11,500 employees. Exactly what form the cost savings should take is still under discussion. One of the options is terminating contracts with third parties. The report does not specify whether any jobs will be cut.
Funding for AI and talent
The cost-cutting measures would serve two purposes. First, the continued expansion of AI data centers, an expense that is unprecedented. Microsoft’s capital expenditures for the quarter ending in June totaled approximately $41 billion, a 69 percent increase from a year earlier. Amazon, Google, Meta, and Microsoft collectively plan to spend about $725 billion on capital expenditures this year. In addition, Microsoft aims to retain employees, who are being courted by competitors such as Meta and Anthropic, companies that are also expanding their AI capabilities at full speed, by offering higher salaries.
Cost-cutting at Azure is commonplace and has been a recurring theme for years. As early as 2024, there were reports of layoffs within Azure, including at Azure for Operations and Mission Engineering. In July 2025, Microsoft cut approximately 9,000 jobs, shortly before reporting strong quarterly results.
New leadership, in-house chips
Earlier this week, The Information also reported that cloud chief Scott Guthrie would be reshuffling Azure’s leadership. Arun Ulag will take a position above Bablani, CTO Mark Russinovich, and security chief Charlie Bell. Ulag will also oversee Azure Core, the division that provides computing power to OpenAI, among others.
Meanwhile, investment in AI capacity continues unabated. On Monday, Microsoft announced that its proprietary Maia chips will become the primary system for running its AI services starting in 2027. More details will follow next month at Ignite. Since September, Microsoft has also been reporting Azure’s revenue separately. In the quarter ending in June, revenue totaled $29.4 billion, a 42 percent year-over-year increase.