Microsoft CEO Satya Nadella addressed employees in a candid internal memo after the company laid off over 15,000 employees in 2025 despite record profits and AI investments.
Microsoft has laid off over 15,000 employees during 2025, including approximately 9,000 in early July alone. These reductions amounted to about 4% of its global workforce, which was around 228,000 employees as of June 2024.
The earlier round in May impacted roughly 6,000 employees (about 3%), again as part of efforts to streamline operations amid heavy AI investments.
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What the memo said?
- “This weighs heavily on me.”: Nadella acknowledged the emotional weight of the decision, stating layoffs are “the hardest decisions we make”, and emphasized gratitude for the contributions of departing employees.
- Profit vs. Layoffs “Enigma”: He admitted the apparent contradiction: “We’re a profitable, growing company, and yet we’re making job cuts. That can feel confusing and frustrating.” Nadella explained that Microsoft needs to reallocate resources and streamline its operations to stay competitive, particularly as it invests heavily in AI, cloud, and security infrastructure.
- “Unlearning and Learning” phase: Nadella described Microsoft’s current phase as one of deep transformation, focusing on becoming an “intelligence engine” to lead in the next technological era.
- Workforce structure and efficiency: He highlighted the need to reduce managerial layers and non-core roles to improve speed, accountability, and clarity of execution within teams.
- Long-term focus: Nadella reassured employees that the layoffs were not a reflection of performance but a realignment to meet Microsoft’s strategic priorities, emphasizing: “We’re making these changes now to ensure we can continue to lead in a world being reshaped by AI.”
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Why this matters:
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Despite record quarterly profits and stock prices above $500, Microsoft’s aggressive investment in AI ($80 billion+ in capex) requires cost efficiencies elsewhere
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Nadella’s memo attempts to humanize the layoffs while framing them as essential to the company’s long-term vision.
Employee reaction
While some employees appreciated the clarity, many have expressed:
- Disbelief over the need for cuts during record profits.
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Anxiety about continued uncertainty.
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Concerns about impacts on morale, especially in gaming divisions like ZeniMax, where employees reportedly learned about layoffs via abrupt email lockouts.
Conclusion
As widely reported and confirmed by Microsoft’s leadership this year alone, the company eliminated over 15,000 roles. These cuts were framed as essential for supporting a bold strategic shift toward AI and efficiency—while also maintaining robust profitability and investment. CEO Nadella’s memo underscores the emotional weight of these decisions and signals that further structural changes may be forthcoming.
