Microsoft will resume hiring after forcing its 228,000-strong workforce through a year-long AI training period, CEO Satya Nadella announced, marking the first clear timeline for ending a hiring freeze that has seen over 15,000 employees cut in 2025 alone.
The tech giant laid off 9,000 workers in July—its largest single round of cuts this year—followed by thousands more eliminated in January, May, and June as Nadella pushes employees to "unlearn and relearn" their jobs using AI tools before he'll approve new hires. The workforce purge represents a stunning reversal from fiscal 2022, when Microsoft expanded headcount by 22% in a pre-ChatGPT hiring spree.
"I will say we will grow our headcount, but the way I look at it is, that headcount we grow will grow with a lot more leverage than the headcount we had pre-AI," Nadella told investor Brad Gerstner on the BG2 podcast that aired in early November.
CEO Satya Nadella bets on Microsoft’s year-long AI transition before expanding workforce again
Nadella explained that the hiring pause isn't permanent—it's a strategic transition period allowing workers to fundamentally reshape how they perform their roles using AI. Employees need time to integrate tools like Microsoft 365 Copilot and GitHub Copilot into their daily workflows before the company expands again.
"It's the unlearning and learning process that I think will take the next year or so, then the headcount growth will come with max leverage," he said, comparing the shift to how email and Excel spreadsheets revolutionised workplace productivity decades ago.
The CEO shared an example of a Microsoft networking executive who, facing massive data center expansion needs, built AI agents to handle maintenance tasks instead of hiring additional staff. "That is an example of a team with AI tools being able to get more productivity," Nadella noted.
Microsoft’s cost-cutting strategy delivers record margins as stock climbs above $500
Despite the layoffs weighing heavily on Nadella personally—he addressed employee concerns in a July memo—investors have rewarded Microsoft's cost-cutting approach. The stock surged above $500 for the first time in July, and the company recently reported its widest operating margin since 2002 alongside 12% year-over-year revenue growth.
Microsoft previously implemented selective hiring freezes in its U.S. consulting division in January 2025 and during the COVID-19 pandemic, though strategic areas like Azure cloud services continued recruiting throughout those periods.
The company now expects all work to begin with AI integration. "Right now, any planning, any execution, starts with AI. You research with AI, you think with AI, you share with your colleagues," Nadella explained.
The tech giant laid off 9,000 workers in July—its largest single round of cuts this year—followed by thousands more eliminated in January, May, and June as Nadella pushes employees to "unlearn and relearn" their jobs using AI tools before he'll approve new hires. The workforce purge represents a stunning reversal from fiscal 2022, when Microsoft expanded headcount by 22% in a pre-ChatGPT hiring spree.
"I will say we will grow our headcount, but the way I look at it is, that headcount we grow will grow with a lot more leverage than the headcount we had pre-AI," Nadella told investor Brad Gerstner on the BG2 podcast that aired in early November.
CEO Satya Nadella bets on Microsoft’s year-long AI transition before expanding workforce again
Nadella explained that the hiring pause isn't permanent—it's a strategic transition period allowing workers to fundamentally reshape how they perform their roles using AI. Employees need time to integrate tools like Microsoft 365 Copilot and GitHub Copilot into their daily workflows before the company expands again.
"It's the unlearning and learning process that I think will take the next year or so, then the headcount growth will come with max leverage," he said, comparing the shift to how email and Excel spreadsheets revolutionised workplace productivity decades ago.
The CEO shared an example of a Microsoft networking executive who, facing massive data center expansion needs, built AI agents to handle maintenance tasks instead of hiring additional staff. "That is an example of a team with AI tools being able to get more productivity," Nadella noted.
Microsoft’s cost-cutting strategy delivers record margins as stock climbs above $500
Despite the layoffs weighing heavily on Nadella personally—he addressed employee concerns in a July memo—investors have rewarded Microsoft's cost-cutting approach. The stock surged above $500 for the first time in July, and the company recently reported its widest operating margin since 2002 alongside 12% year-over-year revenue growth.
Microsoft previously implemented selective hiring freezes in its U.S. consulting division in January 2025 and during the COVID-19 pandemic, though strategic areas like Azure cloud services continued recruiting throughout those periods.
The company now expects all work to begin with AI integration. "Right now, any planning, any execution, starts with AI. You research with AI, you think with AI, you share with your colleagues," Nadella explained.
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