Tech companies are restructuring, cutting jobs, and have slowed the pace of new recruitment. The reduction in headcount is part of the changing workplace dynamics driven by artificial intelligence. But it’s not just employees being let go — the traditional management hierarchy itself is now under pressure. Instead of simply reducing staff numbers, tech giants are rethinking whether layers of management are even necessary in an AI-driven workplace. Earlier, a report revealed that Google is cutting down 35 per cent of its small-team managers. Now Microsoft is signalling a similar direction, with one of its senior leaders suggesting that AI could soon make many managers obsolete altogether.
In a recent episode of Lenny’s Podcast, Asha Sharma, corporate vice president for Microsoft’s AI platform, talked about how artificial intelligence agents could reshape organisational structures. She argued that when AI is deeply embedded in workflows, the org chart may no longer matter as much as the work chart. “At the end of the day, when you have a set of capable agents and people are capable of more things, you’re not going to start to think in hierarchy and communicating upward. You’re going to start to figure out outward, task-based type of opportunities.”
Sharma explained how AI agents could form their own “work chart”, which she described as a structure that routes tasks automatically to the right human-AI mix, rather than relying on a rigid reporting hierarchy. “The org chart starts to become the work chart,” she said. “Tasks and throughput become more important than they have been before.”
According to Sharma, the shift towards using AI agents to sort work will force companies to confront a new set of questions around task allocation. “When a new issue comes up or a new task comes up, how do you actually automatically decide where to route it? Who’s working on that task? How do you observe if the agent’s doing the right thing? How do you fine-tune it if they’re not?” she said.
It’s not just companies who will deploy AI agents at work. Sharma suggested that in the near future employees might bring personal agent stacks into the workplace, much like how they bring their own laptops or phones today. “You can start to have access to a set of skills that you never had before,” she said. Even meetings, she added, could be transformed by the presence of AI agents: “They’ll be weird, but I think they will be a bit better.”
Sharma’s comments on the possible changing dynamics in workplaces come at a time when Microsoft has been trimming staff and restructuring teams. In May 2025, the company laid off around 6,000 employees across multiple divisions. According to a report by Business Insider, part of the motivation was to increase managers’ “span of control”, essentially widening the number of direct reports under each leader while removing unnecessary layers. Microsoft has also slowed hiring in non-critical areas and is shifting resources towards cloud infrastructure and generative AI products.
And Microsoft is not alone in this AI-led restructuring and shift in leadership structures. Companies including Intel, Amazon, and Google have spoken about the need to strip away layers of management to speed up decision-making. Amazon CEO Andy Jassy has repeatedly stressed that he wants the company to operate more like a “startup”, while Google has been running its own efficiency drive.
At Google, CEO Sundar Pichai has also cut down on vice president and manager roles, telling employees the company needs to scale without solving everything through headcount. Most recently, Google announced it had eliminated 35 per cent of its small-team manager positions, with many affected leaders moving back into individual contributor roles, CNBC reported. The company has also offered voluntary exit programmes and introduced buyouts across multiple departments as part of its broader cost-cutting.
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