Microsoft Israel GM on AI Era: Success Means Smarter, Not More Employees

By Diana Bahur-Nir, Meir Orbach In the midst of historic growth and rapid technological advances, Microsoft is redefining its identity. No longer content to be simply a software company, it is positioning itself as an “intelligence engine” for organizations worldwide. This transformation, driven by breakthroughs in cloud computing and AI tools like Copilot, comes even as the company has undergone significant restructuring, laying off 9,000 employees globally earlier this year. In an interview with Calcalist, Alon Haimovich, Israel Country Manager at Microsoft, explains why the AI era demands new skills, how autonomous AI agents are reshaping industries, and why Israel should focus on talent and collaboration instead of competing with tech superpowers on infrastructure.

Microsoft’s AI-driven transformation and workforce changes

Microsoft is a company of enormous size with meteoric growth on one hand, that has decided to make adjustments to its workforce. Saying goodbye to employees is always difficult, but in an email sent at the end of July, Satya Nadella essentially said that in the age of artificial intelligence, the old equation—business success equals more employees—needs rethinking. It’s a dramatic paradigm shift. It’s like saying, ‘The king has no clothes.’ Nadella’s letter explained why Microsoft was reducing headcount despite strong business performance, outlining a new worldview for the AI era. The company no longer seeks to be just a seller of software products, but an intelligence engine for its customers. I have no doubt we’ll see more organizations go through this kind of structural change, closing departments that don’t contribute to growth, and adding employees in areas where they want to expand. There’s an opportunity here: employees who are curious and willing to learn new, relevant tools will thrive, while those focused on routine, repetitive tasks may find their roles disappearing. Others, however, will grow.

From software company to AI platform

Until now, big tech companies invested heavily in cutting-edge infrastructure so customers could run their own generative AI tools. Now, we want to differentiate ourselves by becoming the platform for companies, organizations, and startups to build exactly the AI tools they need for their own purposes. That’s the transformation.

Does this mean anyone who doesn’t contribute to the AI revolution is in danger of losing their job?

Both they and their employers are at risk. The required skill set today is very different from before. Microsoft still has over 220,000 employees, but now, every one of them, when preparing a business plan, is expected to know how to use an AI agent to generate quotes, boost sales using AI, and identify duplication of work that might make certain roles redundant.

Microsoft Israel: Growth despite global layoffs

Saying goodbye to employees is never easy, but in terms of the overall balance, we came out of this round of layoffs in a strong position. I won’t get into specific numbers, but Microsoft Israel’s business arm is one of the fastest growing in the world, and Microsoft continues to invest in it.

Practical AI applications: Copilot and AI agents

It’s about showing a practical AI application. I can have these conversations with Copilot on my way to a meeting in any field and prepare en route. I just used the professional version, but there’s also a simpler version in the browser. Copilot can help with more complex meetings too. For example, if I’m moderating a panel with several funds from different industries, I can ask: ‘How do I involve everyone in the discussion? What’s the story that will connect them, and which question should I ask when and to whom?’ Today there’s also a ‘Security Copilot’ that can help a beginner analyst easily identify where to start investigating a security breach and improve their abilities. This applies to every field. It’s similar to what ChatGPT does—we have a conversation, develop it into text and voice, but it’s not autonomous. You ask a question and get an answer. An AI agent is one step further. For example, I can say: ‘Plan me a trip to Greece with a beachfront villa, authentic food, and minimal tourists. Book the flights and hotels.’ The agent doesn’t just answer, it executes the plan, step by step, with my feedback, until it’s done. That opens up endless applications where you’re not just asking for information or content, but the AI acts on your behalf. Let’s say: ‘Apply for National Insurance on my behalf and complete the process by the end of the day.’ Or: hire a new employee, assign them a phone, car, salary, and workspace. The agent does it autonomously. Is it scary? Maybe, but it’s also full of opportunities.

AI in Israel: Mental health and national priorities

One example is mental health in Israel since October 7. There can be 1,000 potential patients for every psychiatrist, and many can’t even get an initial consultation. The Ministry of Defense and the Rehabilitation Division are already using Mentaily, developed with Sheba Medical Center and based on Microsoft technology, to run an initial triage conversation through LIV, an AI tool that classifies urgency and is now built into the process of requesting recognition for a condition. The Nagel Committee’s conclusions on accelerating AI in Israel recommend investing 25 billion shekels over five years, including 18 billion in building an Israeli AI language model. Spending 18 billion shekels on supercomputing won’t make the difference. Israel has an opportunity to leap forward in every field thanks to AI, and we already have 2,000 AI-based startups out of 7,000 total. The government’s role is to enable and accelerate. But we must recognize what we do best, and what’s better left to others. Israel isn’t China or the U.S., and we don’t have the budget to compete on superpower-scale AI infrastructure. Instead, we should give our research community and startups access to the world’s most advanced AI platforms through partnerships with the largest global companies. Because Israel can’t match the investment levels of companies like Microsoft, which spends $80 billion a year on AI infrastructure. The big tech firms together invest over $300 billion annually. Israel can’t compete at that scale, nor should it. It’s better to leverage their platforms. We manage over 1,900 language models ourselves. Building a supercomputer in Israel is important, but by the time it’s ready, the technology will have already moved on.

What else will help Israel move forward?

Talent development. We need training programs, from schools to professional courses, to prepare developers for building advanced technologies. And we must raise cyber awareness. Israel is a target for major cyberattacks, and AI increases the risks. We have to ensure AI is developed securely and responsibly so it doesn’t cause harm.

Microsoft’s AI investment and future outlook

I feel the benefits already. But when you invest $80 billion in AI, the return isn’t immediate. AI success requires massive investment, and it’s an evolution, not a quick win. Over time, it will pay for itself.

Alon Haimovich’s personal journey and leadership philosophy

I started as a technician driving a Kangoo van, soldering sockets into walls. This was before most people knew what the internet was. I’m not the smartest person in the room, but I’m obsessed with success, love learning, face challenges head-on, and work hard. That took me from technology into sales. I was VP of Technology at Cisco for many years, then moved into business leadership, and here I am. A manager shouldn’t be a know-it-all or emotionally detached. I believe your employees should be better than you. My advantage is seeing the future more clearly than others and breaking it into clear steps. I need to know who I can learn from to make it work. When I interviewed my CTO, he began explaining cybernetics in detail. I stopped him and said: ‘Now explain it to your grandmother in three sentences.’ Why? Because in our world, communication must be clear and impactful, otherwise it’s ineffective. I approach every job as if it’s my last, even when I was an installation technician. Microsoft Israel is one of the fastest-growing sites in the company worldwide. My goal is to keep that momentum going through one of the biggest revolutions of our time. That excites me.

Frequently Asked Questions (FAQ)

What is Microsoft's new strategic direction amidst the AI era?

Microsoft is transitioning from being solely a software company to an "intelligence engine" for organizations globally, driven by advancements in cloud computing and AI tools like Copilot.

Why did Microsoft lay off employees despite strong growth in Azure and AI technologies?

Microsoft's leadership, including Satya Nadella, believes that in the AI era, business success is no longer solely measured by an increasing headcount. The focus is shifting towards efficiency and leveraging AI to enhance productivity, leading to structural adjustments in the workforce.

How are AI agents reshaping industries according to Microsoft?

AI agents are capable of executing tasks autonomously on behalf of users, opening up endless applications. Examples range from booking travel to completing administrative tasks and even hiring new employees, acting as digital representatives.

What is Israel's recommended approach to AI development?

Instead of competing with tech superpowers on infrastructure, Israel is advised to focus on talent development and collaboration. This involves leveraging partnerships with global companies that possess advanced AI platforms, rather than solely investing in building massive infrastructure.

What skills are becoming essential in the AI era?

Employees need to be curious and willing to learn new, relevant tools. Proficiency in using AI agents for tasks such as generating quotes, boosting sales, and identifying redundancies is becoming crucial for career advancement.

How does Microsoft see the role of talent development in Israel's AI future?

Microsoft emphasizes the importance of talent development through training programs at all levels, from schools to professional courses, to equip developers with the skills needed to build advanced AI technologies.

What is Microsoft's strategy regarding AI infrastructure investment?

Microsoft is investing heavily in AI infrastructure, with figures like $80 billion annually being cited. They view AI success as an evolution requiring massive investment, with the belief that it will eventually pay for itself.

What is the difference between Copilot and an AI agent?

Copilot is described as a conversational AI that provides information and assistance, similar to ChatGPT. An AI agent, however, goes a step further by not just providing information but also executing tasks autonomously based on user instructions and feedback.

How can AI improve mental health services in Israel?

AI tools like LIV, developed with Microsoft technology, can help manage the high demand for mental health services by conducting initial triage conversations, classifying urgency, and streamlining the process for patients seeking recognition for conditions.

What is the recommended national priority for accelerating AI in Israel?

Beyond infrastructure investment, the Nagel Committee's conclusions highlight talent development and raising cyber awareness as critical priorities for Israel to harness the potential of AI.

Crypto Market AI's Take

This article from Microsoft highlights a significant shift in how businesses are approaching success in the age of artificial intelligence. The core message—that success in the AI era means becoming smarter, not just larger—resonates deeply with the advancements we track in the cryptocurrency and AI markets. At Crypto Market AI, we see this evolution mirrored in how AI is being integrated into trading strategies and market analysis. The development of sophisticated AI agents, as mentioned by Microsoft, is directly comparable to the advanced trading bots and analytical tools we offer. These tools aim to optimize trading, manage risk, and extract insights from complex market data, essentially making trading smarter. Just as Microsoft is transforming into an "intelligence engine," we are dedicated to providing the tools and intelligence that empower traders to navigate the dynamic crypto landscape. This focus on efficiency and leveraging AI for competitive advantage is a trend we strongly advocate for and facilitate through our platform.

Microsoft Israel GM: ‘In the AI era, success no longer means more employees’