Microsoft CEO addresses layoffs amid strong earnings – Puget Sound Business Journal
Microsoft CEO Satya Nadella has spoken out about the recent wave of layoffs at the tech giant — a move that’s sparked confusion and frustration among employees, especially as the company reports strong profits and pours billions into artificial intelligence (AI).
In a heartfelt memo shared company-wide and posted on Microsoft’s official blog, Nadella acknowledged that the situation “might feel messy at times.” He admitted there’s a strange disconnect: Microsoft is doing incredibly well by most standards — booming stock performance, major AI investments, and a steady overall headcount — yet thousands of employees have been let go this year.
“This is the enigma of success in a fast-moving industry,” Nadella wrote. “Progress isn’t always smooth — it can feel dissonant and demanding. But it’s also a huge opportunity.”
A Balancing Act Between Growth and Cutbacks
Microsoft has laid off over 15,000 people in 2025, including 9,000 in July alone, making this one of the company’s most aggressive downsizing efforts. Leaders say the layoffs are due to changing business priorities and a push to operate more efficiently — not directly because of AI replacing jobs.
At the same time, the company is going all-in on AI. Microsoft is investing a massive $80 billion into capital expenses like data centers and AI chips. It also launched a $4 billion “Elevate” initiative to help people across the world gain AI-era job skills. Still, such huge spending has created internal pressure to cut costs — and in tech, that often means trimming staff.
Microsoft’s rapid hiring of top AI talent, including two dozen employees from Google DeepMind in just six months, shows the fierce competition in this space.
Layoffs Spark Culture Concerns
While Microsoft pushes ahead with its AI ambitions, some employees feel the company is losing its soul. The handling of recent layoffs — including sudden notices and lack of communication — has left many shaken.
A former Microsoft engineer, James McCaffrey, wrote in a widely shared blog post, “Microsoft has gone from a good company to a shameful one with little internal integrity.” Others fear the company is slipping back into its older, more cutthroat culture, undoing the more compassionate workplace Nadella worked hard to build.
Nadella’s Vision: Evolving into an “Intelligence Engine”
In his memo, Nadella outlined Microsoft’s big-picture goals as it transitions from a traditional software company to a global “intelligence engine” focused on AI.
He laid out three core priorities for the company’s future:
- Security
- Quality
- AI Transformation
He emphasized that security and quality are “non-negotiable” as Microsoft’s platforms become increasingly essential to the world.
Nadella acknowledged the challenge of maintaining existing businesses while innovating at the same time. “This dual mandate is inherently hard,” he said, “but I’m confident we can do it.”
Looking Ahead
Comparing this moment to the early days of the PC revolution in the 1990s, Nadella encouraged employees to embrace the discomfort and see it as a period of growth and impact.
“Years from now,” he wrote, “I hope you’ll look back and say: That’s when I learned the most. That’s when I made the biggest impact.”
Nadella promised to share more during the company’s upcoming earnings report and to take employee questions in a town hall soon.
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