Despite recent workforce reductions, Microsoft is planning to increase its headcount with a focus on artificial intelligence (AI)-driven roles, according to CEO Satya Nadella. Nadella revealed that the company envisions future expansion to be "smarter, more strategic, and powered by automation," leveraging AI to enhance employee productivity and efficiency.
Nadella, in a recent podcast appearance, stated that the new hires will be able to achieve more with the assistance of AI. He anticipates that employees will "unlearn and learn" new ways of working as AI becomes more integrated into daily tasks. Tools like Microsoft 365's Copilot and GitHub's AI coding assistant, powered by models from OpenAI and Anthropic, will be instrumental in this transformation.
This announcement comes after Microsoft implemented several rounds of layoffs, reducing its headcount by at least 6,000, followed by a further 9,000 job cuts in July of 2025. These workforce reductions, affecting over 15,000 employees in 2025, were part of a broader trend in the tech industry, with companies like Amazon and Meta also announcing significant job cuts. Nadella acknowledged the "uncertainty and seeming incongruence" of navigating layoffs while the company continues to thrive. He attributed the pressure to reduce operating costs to the company's record capital expenditures in AI and infrastructure.
Microsoft's strategic shift reflects a move from being a "software factory" to building an "intelligence engine," empowering individuals to create AI-powered tools. Nadella emphasized that adapting to new business realities, learning new work methods, and meeting evolving customer needs are crucial for the company's continued success. Microsoft's workforce for the 2025 fiscal year stands at 228,000. In fiscal year 2022, the company's employee base grew by 22%.
Nadella referenced a Microsoft executive in charge of network fiber optics who built an AI agent to handle maintenance, which allowed the company to avoid hiring as many people as initially anticipated. Nadella views this as an example of a team achieving higher productivity through AI tools. The CEO also drew parallels to previous technological shifts, such as the introduction of email and Excel spreadsheets, which changed how work was done.
While some observers suggest that the focus on AI-driven roles may lead to lower salaries, Nadella's statements indicate a broader vision of increasing per-capita productivity through AI, rather than simply reducing costs. Nadella believes that "every plan and execution starts with AI". He expects that the "unlearning and learning process" will take about a year, after which the company can maximize the leverage effect by increasing headcount.
