Microsoft, one of many world’s most dear tech firms, is present process a sweeping inner transformation punctuated by mass layoffs, whilst its monetary efficiency soars and its ambitions in synthetic intelligence attain unprecedented heights. In a memo despatched to staff on July 24, CEO Satya Nadella outlined the paradox on the coronary heart of Microsoft’s present second: ongoing job cuts amid document income, daring AI funding, and a company tradition in flux.
The scope of Microsoft’s 2025 layoffs is appreciable. Greater than 15,000 positions—about 7% of the corporate’s international workforce—have been eradicated since January, making this the corporate’s largest personnel discount since the 2014 cuts following the Nokia acquisition. The most recent and most vital wave got here in July, when roughly 9,000 staff, or 4% of workers, have been knowledgeable their roles have been being eradicated. These newest reductions adopted prior rounds in Could and June, which noticed 1000’s extra let go as the corporate aggressively reshaped itself for the AI period.
The memo: Confronting the ‘enigma of success’
In his July memo, Nadella straight addressed the seeming contradiction on the coronary heart of the layoffs. “By each goal measure, Microsoft is prospering—our market efficiency, strategic positioning, and progress all level up and to the fitting,” he wrote, noting the corporate’s capital expenditures, largely fueled by investments in AI and cloud infrastructure, are at historic highs. Regardless of these investments, he mentioned headcount “is comparatively unchanged,” given the simultaneous discount of jobs.
Nadella known as this stress the “enigma of success in an business that has no franchise worth,” arguing that success in tech just isn’t everlasting or evenly distributed. “Progress isn’t linear. It’s dynamic, typically dissonant, and at all times demanding. But it surely’s additionally a brand new alternative for us to form, lead by, and have better influence than ever earlier than.”
Expressing gratitude to these let go, Nadella acknowledged the human value. “Their contributions have formed who we’re as an organization, serving to construct the inspiration we stand on right this moment. And for that, I’m deeply grateful.”
Resetting Microsoft’s mission
Nadella rooted Microsoft’s new course in three core enterprise priorities: safety, high quality, and AI transformation. He mentioned within the period of AI, Microsoft’s mission should transfer from constructing static instruments to empowering each particular person and group to construct their very own. Nadella described a imaginative and prescient the place “all 8 billion individuals may summon a researcher, an analyst, or a coding agent at their fingertips.” The corporate, he mentioned, is pivoting from a “software program manufacturing facility” to an “intelligence engine”—an acknowledgment that AI is now the lens by which Microsoft will view each product, service, and enterprise unit.
This transition comes with heavy funding: Microsoft is pouring $80 billion into AI infrastructure this fiscal yr, redeploying capital and, crucially, shifting a portion of the workforce to make room for these new bets.
Nadella issued a name to motion to stem anxieties round job safety and morale, urging staff to keep up a “progress mindset” and strategy the messiness of transformation with humility and resolve. “It’d really feel messy at occasions, however transformation at all times is. Groups are reorganizing. Scopes are increasing. New alternatives are all over the place,” he wrote, describing the present give attention to AI as just like the Nineties tech revolution in PCs and productiveness software program.
Microsoft’s sweeping job cuts echo a wider development amongst tech giants in 2025, as firms recalibrate for a post-pandemic market more and more outlined by AI-driven automation. By one rely, greater than 80,000 jobs have been slashed within the tech business this yr. Nadella’s memo didn’t rule out additional layoffs and likewise didn’t promise stability, in search of to unify workers across the mission to “empower others to construct now.”
For this story, Fortune used generative AI to assist with an preliminary draft. An editor verified the accuracy of the data earlier than publishing.
