Microsoft CEO Satya Nadella addressed the massive job cuts in the company in a memo to employees, highlighting that the recent layoffs that have affected over 15,000 employees this year have been “weighing heavily” on him. At the same time, he defended the cuts as crucial for the Redmond giant’s AI restructuring.
“Before anything else, I want to speak to what’s been weighing heavily on me, and what I know many of you are thinking about: the recent job eliminations” – wrote Nadella to over 200,000 employees of Microsoft. “These decisions are among the most difficult we have to make. They affect people we have worked alongside, learned from, and shared countless moments with – our colleagues, teammates, and friends”.
The layoffs impacted around 7% of Microsoft’s global workforce, making it the company’s largest since 2014, said a report by The Times of India.
Despite the cuts, Microsoft’s stock has skyrocketed by 21% this year with records crossing $500 per share and over the course of three fiscal quarters, the company recorded $75 billion in net earnings.
Microsoft CEO Satya Nadella openly acknowledged the “uncertainty and seeming incongruence” of implementing layoffs while the company continues to perform strongly. “By every objective measure, Microsoft is thriving – our market performance, strategic positioning, and growth all point up and to the right,” he wrote.
Despite record-breaking investments and strong financial indicators, including historic levels of capital expenditure and relatively stable headcount, Nadella noted the paradox: “We’re investing more in CapEx than ever before. Our overall headcount is relatively unchanged, and some of the talent and expertise in our industry and at Microsoft is being recognized and rewarded at levels never seen before. And yet, at the same time, we’ve undergone layoffs.”
He called this contradiction “the enigma of success in an industry that has no franchise value,” emphasising that “progress isn’t linear. It’s dynamic, sometimes dissonant, and always demanding.”
Looking ahead, Nadella underscored the need for transformation through adaptability: “Our future success will be defined by our ability to go through this difficult process of ‘unlearning’ and ‘learning.’” He stressed that Microsoft must continue to evolve by “meet[ing] changing customer needs, by continuing to maintain and scale our current business, while also creating new categories with new business models and a new production function.”
Al behind restructuring
At the heart of Microsoft’s workforce restructuring is its shift toward artificial intelligence. The memo outlines a strategic transition “from a software factory to an intelligence engine” as the company channels $80 billion into AI infrastructure. Nadella envisions a world where “all 8 billion people could summon a researcher, an analyst, or a coding agent at their fingertips.”
“As we begin a new fiscal year, I’ve been reflecting on the road we’ve traveled together and the path ahead,” he wrote, placing the layoffs in the broader context of a tech industry transformed by AI-led automation — a shift that has resulted in the loss of over 80,000 tech jobs in 2025 alone.
Nadella offered “sincere gratitude to those who have left,” acknowledging that “their contributions have shaped who we are as a company, helping build the foundation we stand on today.” However, he stopped short of ruling out future job cuts, urging remaining employees instead to adopt a “growth mindset” to navigate the “messiness” of ongoing transformation.
