Microsoft, one of many world’s most dear tech corporations, is present process a sweeping inner transformation punctuated by mass layoffs, at the same time as 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 file earnings, 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 newest and most important wave got here in July, when roughly 9,000 staff, or 4% of employees, had been knowledgeable their roles had been being eradicated. These newest reductions adopted prior rounds in Might and June, which noticed hundreds 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 immediately addressed the seeming contradiction on the coronary heart of the layoffs. “By each goal measure, Microsoft is prospering—our market efficiency, strategic positioning, and development all level up and to the precise,” 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 stated headcount “is comparatively unchanged,” given the simultaneous discount of jobs.
Nadella known as this pressure the “enigma of success in an business that has no franchise worth,” arguing that success in tech isn’t everlasting or evenly distributed. “Progress isn’t linear. It’s dynamic, generally dissonant, and all the time demanding. However it’s additionally a brand new alternative for us to form, lead by means of, and have better affect than ever earlier than.”
Expressing gratitude to these let go, Nadella acknowledged the human price. “Their contributions have formed who we’re as an organization, serving to construct the inspiration we stand on at this time. And for that, I’m deeply grateful.”
Resetting Microsoft’s mission
Nadella rooted Microsoft’s new path in three core enterprise priorities: safety, high quality, and AI transformation. He stated within the period of AI, Microsoft’s mission should transfer from constructing static instruments to empowering each individual and group to construct their very own. Nadella described a imaginative and prescient the place “all 8 billion folks might summon a researcher, an analyst, or a coding agent at their fingertips.” The corporate, he stated, is pivoting from a “software program manufacturing unit” to an “intelligence engine”—an acknowledgment that AI is now the lens by means of 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 12 months, 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 “development mindset” and method the messiness of transformation with humility and resolve. “It would really feel messy at instances, however transformation all the time is. Groups are reorganizing. Scopes are increasing. New alternatives are in all places,” he wrote, describing the present concentrate on AI as just like the Nineteen Nineties tech revolution in PCs and productiveness software program.
Microsoft’s sweeping job cuts echo a wider pattern amongst tech giants in 2025, as corporations 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 12 months. Nadella’s memo didn’t rule out additional layoffs and likewise didn’t promise stability, looking for to unify employees 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 knowledge earlier than publishing.
