Microsoft CEO Satya Nadella addresses 'painful' layoffs, discusses bold AI plans in firm memo

[ad_1] What simply occurred? Microsoft is going through one of the vital turbulent phases in its historical past, balancing huge investments in synthetic intelligence and infrastructure with vital job cuts, making a local weather of uncertainty inside the firm. On Thursday morning, CEO Satya Nadella addressed workers in a memo that immediately acknowledged the contradictions they're experiencing.

"I need to acknowledge the uncertainty and seeming incongruence of the occasions we're in. By each goal measure, Microsoft is flourishing… and but, on the similar time, we have undergone layoffs," Nadella wrote. He described navigating layoffs whereas reporting robust monetary outcomes because the "enigma of success in an trade that has no franchise worth," emphasizing the unpredictable nature of technological transformation.

The layoffs have been in depth, with greater than 15,000 workers let go thus far in 2025, together with a big spherical of 9,000 in early July. These strikes symbolize a number of the most aggressive workforce reductions the corporate has carried out in many years. Whereas total headcount stays comparatively flat as a result of selective hiring, the dimensions of the cuts has unsettled the workforce and prompted troublesome questions on Microsoft's tradition and path.

As the corporate pours sources into constructing capabilities for the AI age, President Brad Smith pointed to the dimensions of Microsoft's capital expenditures as a key issue. Smith advised GeekWire in a latest interview that round $80 billion has been spent over the previous yr on information facilities, AI chips, and different vital infrastructure to take care of the corporate's edge in synthetic intelligence. "File capital expenditures… have put strain on the corporate to scale back working prices," Smith stated.

President Brad Smith stated $80 billion in capital spending pressured the corporate to chop working prices

With the fast tempo of change, Nadella urged workers to give attention to Microsoft's core mission, which, he stated, should additionally evolve. He outlined a shift from being a "software program manufacturing unit" to constructing an "intelligence engine" that empowers everybody – not simply know-how professionals – to create their very own AI-powered instruments. Nadella emphasised that the corporate's continued relevance will depend on adapting to new enterprise realities, studying new methods of working, and assembly altering buyer wants. "Progress is not linear. It is dynamic, typically dissonant, and all the time demanding. However it's additionally a brand new alternative for us to form, lead by means of, and have larger affect than ever earlier than," he stated.

Nadella additionally spoke of the emotional burden that job eliminations have positioned on the corporate, describing them as "among the many most troublesome we've got to make." He expressed gratitude to departing workers for his or her contributions.

In the meantime, inner and exterior commentary has raised issues that the present setting could also be eroding the tradition of inclusion and empathy Microsoft constructed in recent times below Nadella's management, with some longtime workers fearful a few return to extra aggressive, insecure occasions.

Regardless of these headwinds, Microsoft continues to put money into its future, ramping up hiring in vital AI-related roles and launching multi-billion-dollar initiatives to assist staff adapt to the calls for of the AI period. Nadella advised workers to anticipate extra particulars through the upcoming earnings and a future city corridor.