Leadership
“Enigma of success”: Microsoft CEO explains mass layoffs despite AI-led profits boom
|
Updated on
CEO Satya Nadella said the layoffs are part of a company-wide restructuring and pivot towards AI.
Microsoft CEO Satya Nadella sent a memo to employees earlier this week explaining the company’s ‘difficult decision’ to cut thousands of jobs while generating huge profits and spending billions on AI.
“Before anything else, I want to speak to what's been weighing heavily on me, and what I know many of you are thinking about: the recent job eliminations,” Nadella wrote. “These decisions are among the most difficult we have to make. They affect people we've worked alongside, learned from, and shared countless moments with - our colleagues, teammates, and friends.”
Nadella’s note is seen as a response to another round of Microsoft layoffs affecting 9,000 positions - nearly 4% of its current workforce - as part of a company-wide restructuring strategy. It previously dismissed 6,000 workers in May and closed its Pakistan office earlier this month.
Microsoft’s gaming division suffered some of the biggest losses, with more than 3,000 jobs eliminated since its $69 billion acquisition of Activision Blizzard in 2023. It also cancelled several game titles, including the Perfect Dark revival and the original IP Everwild.
The layoffs are reportedly part of Microsoft's plan to shrink the number of middle management roles and increase the ratio of coders to non-coders as the company seeks to expand its ‘span of control,’ or the number of employees reporting to a manager. The company also normally announces organisational changes at the end of its fiscal year.
Microsoft reported a net income of $75 billion over the past three fiscal quarters and is on track to hit a $4 trillion market cap. Profit for the first three months of 2025 also exceeded expectations by rising 18% to $25.8 billion, while stock is up by 21% this year.
Nadella acknowledged the contrast of the recent job cuts with the company’s unprecedented profits, saying it was the ‘enigma of success’ in an industry where progress is not a straight line. He also reiterated that the company’s overall headcount, which numbers around 220,000 globally, remains relatively unchanged.
Nadella also described Microsoft as currently in the process of evolving from being a ‘software factory’ to an ‘intelligence engine’ that will provide worldwide access AI. The company previously announced plans to invest more than $80 billion in Microsoft AI development and infrastructure.
“By every objective measure, Microsoft is thriving - our market performance, strategic positioning, and growth all point up and to the right,” he said, addressing the ongoing Microsoft restructuring.
Author
Loading...
Loading...