Microsoft CEO Satya Nadella in a company-wide memo, acknowledged that the recent layoffs of over 15,000 employees have been “weighing heavily” on him. He expressed empathy for those affected but emphasized that the decision was necessary to drive the company’s transformation toward artificial intelligence.
“Before anything else, I want to address what’s been weighing on me – and on many of you – the recent job eliminations,” Satya Nadella wrote to Microsoft’s global workforce of over 200,000.
“These are some of the hardest decisions we face. They impact individuals we’ve collaborated with, learned from, and shared countless experiences with – our colleagues, teammates, and friends.”
The recent layoffs affected nearly 7% of Microsoft’s global workforce, marking the company’s largest job reduction since 2014. Despite the cuts, Microsoft’s stock has surged 21% this year, reaching record highs above $500 per share. The company also reported a staggering $75 billion in net income over the past three fiscal quarters.
Satya Nadella Unpacks the “Enigma of Success” and Its Challenges
Satya Nadella confronted the “uncertainty and seeming incongruence” of laying off employees at a time when Microsoft is achieving record growth and financial success.
“By every objective measure, Microsoft is thriving — from market performance to strategic growth,” Nadella wrote. “We’re investing more in capital expenditures than ever, our overall headcount remains largely stable, and top talent is being recognized at unprecedented levels. Yet, even amid this success, we’ve had to make the difficult decision to implement layoffs.”
He described the situation as “the enigma of success in an industry with no franchise value,” emphasizing that progress is rarely straightforward: “It’s dynamic, sometimes dissonant, and always demanding.”
The Microsoft CEO added that future success will hinge on the company’s ability to navigate the challenging process of both “unlearning” and “learning.”
He emphasized that this transformation demands Microsoft to adapt to evolving customer needs by sustaining and scaling its existing business, while simultaneously creating new categories, business models, and a modern production function.
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Microsoft Restructures Workforce to Accelerate AI Transformation
The memo stated that Microsoft is shifting from a “software factory to an intelligence engine,” underscoring its $80 billion investment in AI infrastructure.
Satya Nadella envisions a future where “all 8 billion people can have a researcher, analyst, or coding agent at their fingertips.”
“As we enter a new fiscal year, I’ve been reflecting on the journey we’ve shared and the road that lies ahead,” Nadella wrote.
The CEO expressed “sincere gratitude to those who have left,” recognizing that “their contributions have shaped who we are as a company and helped build the foundation we stand on today.”
However, Nadella offered no assurances against future layoffs, instead encouraging employees to embrace a “growth mindset” amid the “messiness” of transformation.
