Microsoft needs fewer employees and a greater reliance on AI agents to compete with OpenAI and Anthropic, former Microsoft Entra product manager Merill Fernando has claimed, arguing that the tech giant's layers of management and siloed teams are slowing its ability to innovate. His comments come as Microsoft rolls out a voluntary exit offer for around 60,000 eligible employees across India, the US, the UK and Canada.
In a post on X, Fernando said Microsoft's existing scale, infrastructure and customer base were not enough to maintain its competitive position if the company could not move quickly. He cited the slow adoption of a security feature across Microsoft's products as an example of how internal organisational barriers could delay technology deployment for years.
"Microsoft needs fewer people," Fernando wrote, adding that the company needed to lean harder into agentic work, in which AI systems can execute tasks and multi-step workflows with varying degrees of human supervision.
"Right now OpenAI and Anthropic are shipping at a pace Microsoft can’t match," he said. "Microsoft has to change to survive."
Fernando's assessment comes amid a fresh workforce restructuring initiative at Microsoft, although the company has not said that its voluntary exit offer is intended to accelerate AI adoption or that it is linked to the concerns he raised.
Why does the former Microsoft PM say the company is too slow?
Fernando said his experience inside Microsoft showed how organisational complexity could obstruct the rollout of technology, even when the benefits were clear.
"I've been on the inside. I've seen how things get built. Lots of small orgs. Layers on layers. Silos everywhere," he wrote.
He cited managed identities, a security feature developed by Microsoft's Entra team in 2017 that allows applications and services to authenticate without embedding conventional secrets in code.
According to Fernando, the team struggled to persuade other Microsoft organisations to adopt the feature, with different teams pursuing their own priorities and decisions.
"The Entra team shipped managed identities back in 2017. No more secrets in code. A clear security win.
"Then they tried to get the rest of Microsoft to adopt it. Very few teams did, and the ones that did moved at a snail’s pace. Every org had its own priorities and its own decision makers."
Fernando claimed that adoption gained momentum only after Microsoft suffered a security breach and launched its Secure Future Initiative (SFI), a company-wide effort to strengthen security.
"It took Microsoft getting hacked, and the Secure Future Initiative that followed, before things really moved.
"Today almost every Microsoft app and service supports managed identity.
"Six years, and a major breach, to get there."
Can AI agents fix Microsoft's execution problem?
Fernando argued that AI agents could help Microsoft overcome internal bottlenecks by making it easier to implement technology and processes across its businesses without lengthy coordination between teams.
"In a world with agents and fewer people, that rollout would be possible across Microsoft in months, not years," he wrote.
His argument is not simply that AI could automate individual jobs, but that a smaller workforce supported by AI agents could execute projects faster across a large organisation.
"Microsoft already has everything else. The customers. The infrastructure. The scale.
"What it needs is fewer people, leaning hard into agentic work."