Microsoft CEO Satya Nadella in a memo acknowledged that the recent layoffs of over 9,000 employees have been "weighing heavily" on him, but defended the move as necessary for the tech giant’s AI transformation.
"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 to Microsoft's more than 200,000 employees.
"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."
The recent layoffs was nearly 7 per cent of the company's global workforce. It was the largest for Microsoft since 2014. Despite the job cuts, Microsoft's stock has soared 21% this year, hitting record highs above $500 per share, while the company reported $75 billion in net income over three fiscal quarters.
Satya Nadella explains the "enigma of success"
Nadella addressed the "uncertainty and seeming incongruence" of cutting jobs even while the company soared to new highs.
"By every objective measure, Microsoft is thriving – our market performance, strategic positioning, and growth all point up and to the right," he wrote. "We're investing more in CapEx than ever before. Our overall headcount is relatively unchanged, and some of the talent and expertise in our industry and at Microsoft is being recognized and rewarded at levels never seen before. And yet, at the same time, we've undergone layoffs."
He described the situation as "the enigma of success in an industry that has no franchise value," explaining that "progress isn't linear. It's dynamic, sometimes dissonant, and always demanding."
The Microsoft CEO further said that future success "will be defined by our ability to go through this difficult process of 'unlearning' and 'learning.'"
He argued this transformation requires Microsoft to "meet changing customer needs, by continuing to maintain and scale our current business, while also creating new categories with new business models and a new production function."
AI transformation drives Microsoft's workforce restructuring
The memo said that Microsoft is pivoting from a "software factory to an intelligence engine" and has invested $80 billion in AI infrastructure.
Nadella envisions a future where "all 8 billion people could summon a researcher, an analyst, or a coding agent at their fingertips."
"As we begin a new fiscal year, I've been reflecting on the road we've traveled together and the path ahead," Nadella wrote.
The CEO said, "sincere gratitude to those who have left," acknowledging that "their contributions have shaped who we are as a company, helping build the foundation we stand on today."
However, he offered no guarantees against future layoffs, instead urging remaining employees to maintain a "growth mindset" during what he called the "messiness" of transformation.
"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 to Microsoft's more than 200,000 employees.
"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."
The recent layoffs was nearly 7 per cent of the company's global workforce. It was the largest for Microsoft since 2014. Despite the job cuts, Microsoft's stock has soared 21% this year, hitting record highs above $500 per share, while the company reported $75 billion in net income over three fiscal quarters.
Satya Nadella explains the "enigma of success"
Nadella addressed the "uncertainty and seeming incongruence" of cutting jobs even while the company soared to new highs.
"By every objective measure, Microsoft is thriving – our market performance, strategic positioning, and growth all point up and to the right," he wrote. "We're investing more in CapEx than ever before. Our overall headcount is relatively unchanged, and some of the talent and expertise in our industry and at Microsoft is being recognized and rewarded at levels never seen before. And yet, at the same time, we've undergone layoffs."
He described the situation as "the enigma of success in an industry that has no franchise value," explaining that "progress isn't linear. It's dynamic, sometimes dissonant, and always demanding."
The Microsoft CEO further said that future success "will be defined by our ability to go through this difficult process of 'unlearning' and 'learning.'"
He argued this transformation requires Microsoft to "meet changing customer needs, by continuing to maintain and scale our current business, while also creating new categories with new business models and a new production function."
AI transformation drives Microsoft's workforce restructuring
The memo said that Microsoft is pivoting from a "software factory to an intelligence engine" and has invested $80 billion in AI infrastructure.
Nadella envisions a future where "all 8 billion people could summon a researcher, an analyst, or a coding agent at their fingertips."
"As we begin a new fiscal year, I've been reflecting on the road we've traveled together and the path ahead," Nadella wrote.
The CEO said, "sincere gratitude to those who have left," acknowledging that "their contributions have shaped who we are as a company, helping build the foundation we stand on today."
However, he offered no guarantees against future layoffs, instead urging remaining employees to maintain a "growth mindset" during what he called the "messiness" of transformation.
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