Frontier firm, where AI is not only being used for automating simple tasks but where AI agents are being used to take on decision-making roles.
Recently, The Guardian reported that Microsoft predicts a future where businesses look very different, thanks to AI. In its latest report, the tech giant says “frontier firms” are on the rise. These are companies where human workers manage teams of AI agents, directing them to handle tasks like analyzing sales or creating financial forecasts.
Microsoft expects these firms to become common in the next five years. The idea is that humans will focus more on strategy, while AI takes care of the busy work. This change will happen in three steps: first, AI will assist workers; next, AI agents will act like digital teammates with their own tasks; and finally, humans will oversee whole workflows run by AI, stepping in only when needed. “As agents increasingly join the workforce, we’ll see the rise of the agent boss: someone who builds, delegates to and manages agents to amplify their impact and take control of their career in the age of AI,” said Jared Spataro, a Microsoft executive, as quoted by The Guardian.
The Guardian story also highlights concerns about the economic implications, with the International Monetary Fund estimating that 60% of jobs in advanced economies may face AI-related disruptions. Dr. Andrew Rogoyski, a director at the Surrey Institute for People-Centred AI, expressed caution, telling The Guardian, “The temptation will be to use AI workers to displace human effort as companies strive to become more efficient, with lower operational costs.” Microsoft’s vision of agile, AI-powered frontier firms, as reported by The Guardian, promises innovation but underscores challenges in balancing technological advances with workforce stability.
In Australia’s context
Australian businesses are poised for a major shift, with “frontier firms” integrating AI agents as digital team members to enhance productivity and transform roles, according to Microsoft’s latest Work Trend Index report. Surveying 31,000 workers across 31 countries, including 1,000 in Australia, the report highlights that frontier firms, where AI agents handle decision-making tasks are surpassing competitors. Globally, 71% of frontier firm workers report their companies are thriving, compared to 37% at other firms. In Australia, 75% of business leaders plan to deploy AI agents within 18 months to expand workforce capacity.
“Most businesses are already using AI to automate tasks, but the next phase will see agents join teams as ‘digital colleagues,’ taking on specific tasks such as building go-to-market plans or internal communications strategies under human supervision. These agents will help boost employee skills and free them to do more meaningful work and reshape how they work. The final step will be seeing agents run entire business processes and workflows. But the critical thing will be getting the balance right, ensuring organisations are using enough AI agents to maximise productivity, without overwhelming human employees’ capacity to oversee their decisions and provide them with the necessary direction,” said Lucy Debono, Modern Work Business Director at Microsoft Australia and New Zealand.
The report underscores the need for human-AI collaboration, with 40% of Australian leaders using AI to automate workstreams and 70% planning to hire for AI-focused roles. “Replacing people with AI might seem efficient in the short term, but it erodes resilience and innovation. Leaders must stop seeing this as a binary choice. It’s not AI or people: it’s both,” Debono said. She further noted, “And what we’re seeing is that the reasons employees turn to AI over a colleague is because it’s available 24/7, it can do a task faster, and it helps with creative ideas – but it’s going to take a long time before it can match the judgement of a human being. Not every business function will change at the same pace, or to the same degree.”
Microsoft predicts the rise of the “agent boss,” where employees oversee both human and AI workers. However, a knowledge gap persists: 71% of Australian leaders are familiar with AI agents, but only 31% of employees are, a wider divide than the global average. “AI agents are about to become part of every team and every workflow. But if only leaders understand how to use them, we’re setting up a two-speed workforce. Closing that gap is not a tech rollout issue: it’s a leadership challenge, and a massive opportunity to support Aussie workers in their confidence and capability to leverage agentic AI,” Debono said.
To transition into frontier firms, Microsoft advises hiring AI agents as team members, balancing human-AI ratios, and rapidly scaling adoption in areas like operations and customer service. “We’re not in an AI pilot phase anymore – as the report says, real change requires broad adoption and activation at every level of the organisation. This is our moment to build an inclusive AI economy. If Australia moves fast to get the foundations right now, it will be setting itself up for a much more productive future, and one where employees can also enjoy having more time to focus on valuable work and less on routine decision-making,” Debono said.
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