IT News on October 15th: According to The Information, the team responsible for Microsoft's Azure is being asked to tighten their belts. The president of Microsoft's Azure department, Girish Bablani, is said to have requested a 20% reduction in internal costs.

Microsoft denied the report, stating that the Azure leadership has not instructed employees to develop formal cost-cutting strategies, and that the business is often prepared for a variety of unexpected situations.

The Information Sources revealed that the department has approximately 11,500 employees, and the specific methods for cost reduction are still under discussion. One of the options is to terminate contracts with third parties. The report does not specify whether any job positions will be cut.

For the fiscal year ending June of this year, Microsoft Azure generated $101.9 billion in revenue, a 40% increase from the same period last year; revenue in the second quarter grew by 43% and accounted for nearly 31% of Microsoft's total revenue.

The report states that these cost-cutting measures have two purposes. The first is the continued expansion of the AI data centers, which represents an unprecedented expense. As of the second quarter of this year, Microsoft's total capital expenditure amounted to approximately $41 billion, a year-on-year increase of 69%. In addition, Microsoft also hopes to retain its employees, while competitors such as Meta and Anthropic are also making every effort to expand their AI capabilities and competing for employees by offering higher salaries.