Work IQ explained: the context engine behind Copilot and Cowork

Work IQ is the intelligence and context layer that powers Microsoft 365 Copilot and agents. It gives Copilot real-time, shared context across your organization by connecting signals from the entire M365 ecosystem and your business systems.

The result is personalized search, advanced reasoning and deeper semantic understanding of your data. Work IQ consists of three layers:

• •Data: gathers signals from files, emails, meetings, chats and business systems
• •Memory: keeps track of context over time
• •Inference: reasons across the signals to understand what you mean

In short, Work IQ is the engine that makes Copilot answer not like a generic AI, but like an AI that knows your business.

Both Microsoft 365 Copilot and Copilot Cowork run on Work IQ. Work IQ is the engine and the context, Cowork is the action layer that uses it.

When Cowork executes a multi-step task, for example "draft the quarterly report and send it to the leadership team", it's Work IQ that knows which files the quarterly report is built on, who the leadership team is, and which earlier documents are relevant. Without that shared context, Cowork couldn't execute the task meaningfully.

It's also why answers from Copilot are grounded in your data: Work IQ delivers the context, so the AI answers from your business rather than just web data.

For most SMBs, Work IQ is "under the hood". It's not a separate SKU or a standalone purchase, and it's not a separate line item on the bill.

Work IQ comes with your M365 Copilot license. The point for an SMB is simple: it's the reason Copilot and Cowork understand your data, not something you buy on top.

There are also Work IQ APIs, which became generally available on June 16, 2026. They let developers and IT build enterprise agents on the same intelligence layer that powers Copilot. That's relevant if you have a development team that wants to build custom agents, but it's not something a typical SMB user deals with.

Work IQ is built to keep your data within your own tenant boundary. Data, context and insights do not leave the M365 tenant boundary, and agent actions built on Work IQ are auditable.

For a Danish company with GDPR and possibly NIS2 obligations, that matters: you retain control over where your data is processed, and you can document what agents have done. It supports good access management and logging, which are at the core of responsible data handling.

The direction is that more agents will share the same context via Work IQ. In practice that means more coherent experiences: an agent that books a meeting, one that prepares the material, and one that follows up can all draw on the same understanding of your organization.

We keep the framing sober. It's early days for agentic AI in M365, and a lot depends on how you configure it, how structured your data is, and how you manage usage and access. Work IQ is the foundation that makes it possible, but the value depends on how you use it. Start with concrete needs, measure the effect, and expand when you can see the result.