Microsoft has denied claims that senior leadership at its cloud computing business has called on teams to develop cost-saving ideas to reduce spending by at least 20 percent.

As reported by The Information and citing an unnamed source, Microsoft Azure's president, Girish Bablani, allegedly asked senior members of staff to help reduce costs, though whether this could translate into layoffs is unclear.

Microsoft has, however, refuted these claims. A spokesperson said: "Azure leadership has not directed teams to develop cost-cutting plans. Every responsible company prepares for a range of scenarios and market dynamics, both positive and negative. This is inaccurate and careless reporting.”

The Information went on to report that cost-cutting measures could include reducing work with contractors on the cloud unit, and that Azure chief Scott Guthrie had previously told staff that the company wanted to increase AI spending budgets internally so workers could automate more tasks.

The publication notes that as competition is rising for experienced leadership in the AI space, with AI labs hiring at a rapid clip, the cost per head for employees has risen to enable companies to retain talent.

The rush to build out AI data center capacity is also leading to growing costs for the hyperscalers, with their annual capex commitments growing drastically.

In 2024, Microsoft's total capex was $55.7bn. In the years following, this has grown to $115.9bn in 2025 and $145.3bn in 2026, estimated to reach $175bn in 2027. In September, reports emerged that Microsoft was aiming to have some 38GW of data center capacity live by 2032, including that which is leased from other providers. In the quarter ending June 30, Microsoft signed around $130bn in data center leases.

The need to expand capacity globally has been felt by customers as well. Computing UK reported today that Markerstudy Insurance, a UK & Ireland business and customer of Microsoft, has found cloud resources are increasingly restricted.

Markerstudy Insurance's CTO Nick Ovenden said of increasing its use of Microsoft Azure: "Every time we try and do something, we basically get ‘no, you can't have that’, and we have to go and make a case to get it.

“Historically, it was sold as: ‘If you want it, we'll spin it up, you can have it’. It was almost like it was unlimited. Microsoft is very much rationing what is available to you.”

Ovenden added that Microsoft has told the company that “they have constraints in their data centers, and there are too many people asking for the same things.”

This, of course, could be isolated to the company's UK cloud regions, with similar claims being made earlier this year regarding the UK South region. At the time, Microsoft said: "Azure is delivered through a global network of around 80 regions worldwide, giving customers flexibility in how they deploy and scale workloads.

"As customer demand for Azure services in the UK remains strong, we continuously monitor and adjust how resources are allocated to ensure reliable support for existing customer workloads and maintain service availability and performance.”

DCD has contacted Microsoft for further comment.