Microsoft reshapes GitHub teams as AI coding startups force a strategic rethink

GitHub Copilot

• Microsoft is reorganizing GitHub to focus on AI agents and automated workflows
• Teams and resources are shifting to compete with rising AI-native coding tools
• GitHub aims to become a hub for AI-powered software development and analytics

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Microsoft is reportedly making significant internal changes to how GitHub operates, as it looks to defend its position against a fast-growing wave of AI-native coding tools. According to a recent report, the company has begun reshuffling teams within GitHub to place greater emphasis on building AI agents and automated development workflows.

The reorganisation is said to be driven by a strategic decision to modernise GitHub’s core role in the software development process. While GitHub has long been the default place for developers to store and collaborate on code, Microsoft now wants it to play a more active role in how software is built, tested, and managed using AI. Sources familiar with the matter suggest that resources are being shifted away from traditional functions and towards agent-based tools that can handle more of the development lifecycle.

A report from Business Insider claims these changes are partly a response to rising competition from AI-first developer tools. In particular, startups such as Cursor and Anthropic’s Claude Code are gaining traction by offering developers alternative, AI-driven environments that go beyond what GitHub currently provides. These tools are increasingly positioning themselves not just as assistants, but as central workspaces for writing and managing code.

Microsoft acquired GitHub in 2018 for $7.5 billion, a deal that initially reassured developers that the platform would remain largely independent. While GitHub has continued to benefit from its entrenched position and massive user base, the rapid rise of generative AI has forced Microsoft to rethink that hands-off approach. The company now appears to be adjusting its workforce and priorities to ensure GitHub remains relevant as automated coding assistants become more capable.

Part of this shift began in January 2025, when Microsoft formed a new internal group focused specifically on AI tools. The unit, known as CoreAI Platform and Tools, is led by Jay Parikh, a former senior engineering leader at Facebook. The group brought together teams from Microsoft’s developer division, its AI platform, and GitHub, signalling a more integrated approach to AI development across the company.

Despite this, Microsoft and GitHub have continued to operate with some separation. Over the past few months, however, Microsoft has reportedly been moving people and resources around to improve coordination across areas such as engineering and sales. The latest step involves shifting a small group of Microsoft engineers directly into GitHub, with the goal of accelerating work on AI agents that can better compete with rival tools to GitHub Copilot.

Internally, Parikh has been clear about the ambition. In a meeting last year, he reportedly told staff that GitHub needs to evolve beyond being a place where developers simply store code. Instead, Microsoft wants it to become the centre of gravity for AI-powered software development. That vision includes turning GitHub into a dashboard where developers can manage multiple AI agents working across different tasks, an idea Parikh has described as building an “agent factory”.

The changes are not limited to AI alone. Parikh has also spoken about renewed investment in GitHub’s core features. These include improving GitHub Actions, which automates building, testing, and deploying code, as well as expanding analytics tools that help teams understand how their software performs. Security enhancements and better support for local data storage requirements are also part of the plan, allowing GitHub to operate more easily in additional countries.

Taken together, the reorganisation suggests Microsoft sees the current moment as a turning point. As AI coding tools move from novelty to necessity, GitHub’s future may depend on how successfully it transforms from a passive platform into an active, AI-driven development environment.